Lawyers who are paid by clients with proceeds generated through money laundering run the risk of being forced to forfeit those proceeds and/or the risk of imprisonment, says anti-money laundering specialist Toussant Boyce.
Being made to forfeit what he described as “tainted fees,” as well as the risk of imprisonment were just a few of the risks lawyers face as the “anti-money laundering gatekeepers” that Anti-Money Laundering (AML) legislation makes them, Boyce told a group of almost thirty lawyers during a presentation at the High Court Conference Room on Friday afternoon.
Considering the current hype in Guyana, where money laundering and terrorism financing issues are concerned, Boyce was invited by the Guyana Bar Association (GBA) to make a presentation to the lawyers.
Speaking to the group of 18 female lawyers and 7 male lawyers, Boyce explained that anti-money laundering legislation pushed by the Financial Action Task Force (FATF), and by extension the Caribbean Financial Action Task Force (CFATF), has the ability to target the fees and even the freedom of lawyers if it is perceived that they were aware that they were being paid with laundered proceeds.
Even if jail time is out of the question, he said, an attorney can find that they would have done a substantial amount of work on a case but end up not getting paid, or having their payment taken away because of how it would have been generated.
In his presentation he gave the case of a United States lawyer, Ben Kuehne, who was charged in 2007 under 1988 AML laws. It was believed that the lawyer knowingly received legal fees from a client which came from criminal activities. Two years after being charged though, a U.S. judge dismissed the indictment against Kuehne since the U.S. constitution exempts “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.”
Charges were therefore dropped against Kuehne, but onlookers, Pace Law School Professor Bennet L. Gershman, for instance, noted that “it is the first and only decision that I know of construing the money laundering statutes as it applies to attorneys.”
Another observer said, “tainted money paid for legal fees are subject to forfeiture…so although the Kuehne case means that a criminal defense attorney will not go to jail for accepting tainted money, it doesn’t lower the risk that the attorney will do a lot of work in the case and end up not getting paid.” It was also considered that the two-year criminal investigation of Kuehne must have disrupted his life and career.
Boyce noted that criticising the court’s move against Kuehne, the Co-Chair of the American Bar Association’s Section’s Criminal Litigation Committee said that the indictment “made an effort to invade the most sacred right of criminal defendants; that is, the right to counsel,” and lauded the decision to drop the charges.
Boyce also spoke of the risk of “Privileged Information,” which he described as a massive problem. It is possible, he said, that a lawyer who stores all of his/her information, those privileged and otherwise can be seized for the purpose of an investigation.
He said that a lawyer who ascertains or is aware of the fact that a client might be involved in money laundering or any suspicious activities should keep records and documents concerning that client separate from general records, properly marked, and always ensure that they are easily accessible in case an investigation commences without warning.
Taking such measures, he said, “is a powerful defence to applications for disclosure of information, whether in criminal or civil proceedings.” He added that “it can be used as shield against a statutory demand for information made by a public body. The privilege is perpetual unless the privilege holder waives its protection. It cannot be suppressed in the name of other public interests,” he explained.
He further said that this precaution should not be taken as a way to cheat the system, but to be more able to safeguard themselves against the implications of money laundering.
Another risk is the “Confidentiality Controversy,” created by a lawyer’s obligations under AML legislation colliding with their obligation to keep information provided to them by clients in confidence, Boyce explained.
He said that AML laws can require a lawyer to engage in due diligence exercises before determining if they should represent a client; to report suspicious transactions the client might be carrying out to the authorities; or even to disclose a client’s identification or confidential transactional information.
Furthermore, he said, a client who is involved in money laundering might be aware of his/her lawyer’s obligations under existing legislation and decide to ask their lawyer if they have reported their activities. In such a case, Boyce warned, a lawyer should not say if they have made such reports.
Such requirements, he says, forces a lawyer to choose between the oath he/she took to represent a client, thereby upholding their ethical and professional duties to those clients and their disclosure duties to the state.
Such conflict, he said, drove Canadian lawyers to challenge such conflicting obligations. He said that “Canadian courts have said that this is inconsistent with the independence of the Bar,” and have successfully challenged laws which require them “to share information with law enforcement,” arguing that such requirements puts “lawyers and their clients at risk.”
Finally, he said, even if a lawyer does not end up behind bars after being charged for accepting tainted fees, “unfavourable perceptions, including allegations, official investigations, convictions, seizures etc. can do lasting damage and untold damage to a lawyer’s reputation.”
Boyce told the lawyers that these realities should make it clear that they should be following the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) (Amendment) Bill, very closely, and even make recommendations to ensure that the legislation, once passed, will not hurt them.
The Guyana Bar Association had made a submission to the now dissolved Select Committee which was charged with considering the Bill for several months, but it is uncertain if the contents of the submission were used to make changes to the Bill.
Noting that the Bill has not yet been passed, Boyce said, lawyers should now try to play a much larger role in effecting what goes into the Bill, since it will ultimately affect the way they carry out their mandate. He said that the risks which have been outlined can be highlighted and presented to lawmakers, so they do not make the mistakes that some other territories have.
Aside from in the U.S and Canada, where actions have been initiated against AML obligations on lawyers, such laws in Turkey and Monaco have been suspended pending the outcome of legal action.
For many years here, a variety of lawyers have been paid with what were most likely the laundered proceeds of drug trafficking businesses. These matters have never been investigated here even though their paymasters have ended up in foreign prisons on charges of drug trafficking among others.
