Dirty cash rules perplex solicitors

He says they were praised last summer by the National Criminal Intelligence Service (NCIS) for the number and quality of their disclosures since the Proceeds of Crime Act came into force early last year, but they nevertheless face difficult professional questions in trying to make the law work.

Solicitors, he says, are aware of the need to avoid becoming the unwitting dupes of criminals with dirty money to process, for whom a respectable legal practice would be an ideal medium for converting their cash into assets about which few questions would be asked. But the duties imposed by the Act go far beyond that basic scenario and strike at the heart of the traditional solicitor-client relationship.

Failure to disclose criminal conduct could incur penalties of up to 14 years in prison. So could a failure to act on discovering that your client, suing for loss of earnings following an accident, has managed to make a few pounds doing odd jobs without telling the authorities. Even a suspicion is enough.

"Not only that, the law penalises being up-front with your client and advising them that you are bound to disclose - tipping off the subject of a disclosure in this way is itself an offence," Platt adds.

"So it could be criminal for a solicitor not to lie to his or her client if put on the spot - a remarkable state of affairs for a profession grounded in obligations of confidentiality and trust.

"Encouraging clients to be forthright, in my experience, often works in the interests of justice, but inhibiting clients could work very much against the interests of justice.

"Scottish solicitors have had rules designed to prevent money laundering since 1994 and are probably ahead of the game when it comes to adopting compliance measures relating to the Proceeds of Crime Act.

"Roadshows and other visits to local firms, circulars to individual members, articles in its journal and a substantial guidance section on its website are only some of the means by which the Law Society of Scotland assists in keeping solicitors on the right side of the law.

"That the profession as a whole takes its duties extremely seriously is evidenced by the fact that all 625 places at this year’s annual conference, a day-long seminar in March dedicated to the subject of money laundering with a series of top speakers, was fully booked by early January.

"But the law must be workable. If rather than achieving its intended ends it has the effect of annoying large numbers of clients and their solicitors, and destroying people’s confidence in their legal advisers, the government must be open-minded enough to be ready to amend it. Otherwise the whole system is likely to collapse under the weight of trivial and unnecessary reports."

An amendment would certainly be welcomed by the Institute of Chartered Accountants of Scotland (ICAS).

In a position paper on the Proceeds of Crime Act, ICAS notes that the Act reserves the right of members of the legal profession to have discussions with their clients which are immune from discovery by the authorities.

It continues: "Chartered accountants and lawyers bring the same interpretative and analytical skills to bear on the same sorts of professional engagements - tax compliance, tax planning and corporate finance, for example. Indeed, it is more likely that a chartered accountant would provide these services.

"The restriction of privilege to one profession and the denial of it to the other creates an arbitrary detriment to regulated accountants. The consequence is that government may breach the anti-monopolistic provisions of the Treaty [of the European Union] and impair the fundamental freedoms guaranteed by the European Convention.

"We assume it cannot have been the parliamentary intention to create a barrier to choice of advisers available to the public. We therefore believe that our members (and those of the other accountancy supervisory bodies, who are subject to stringent ethical requirements) should be entitled to enjoy privileged discussions with their clients under the terms of the Act.

"Unregulated accountants should not, in our view, have this privilege."