AML-CFT proposals of the European Commission endanger the independence of the legal profession | AML package

In the October newsletter CCBE wrote two articles on AML/CFT subjects and voiced its concern about the consequences of legislative proposals for the independence of the legal profession:

The CCBE voices concerns on the Anti-Money Laundering package

On 8 October, the CCBE adopted its Preliminary comments on the Anti-Money Laundering (AML) package that the Commission presented on 20 July. The CCBE duly noted the publication of the package and wished to express preliminary first comments with regards to the proposals, before adopting a more detailed position. In these preliminary comments, the CCBE recognises the need to have in place effective AML/CFT rules and welcomes the objective of the proposals to further harmonise standards. However, the paper also underlines the lack of full assessment of the existing framework, the risks of European level supervision, the importance of self-regulation and independence of the legal profession for ensuring the rule of law, and the risk of interference into individual cases. On 13 October, the AML committee also met with representatives from DG FISMA to listen to their presentation about the AML package and to hold a discussion about it.

CCBE participation in the FATF targeted consultation

On 16 September, the CCBE was invited by The Financial Action Task Force (FATF) to participate in a targeted consultation to clarify FATF Recommendations 18/23. The aim of this project is for the FATF to clarify the requirements on Designated Non-Financial Businesses and Professions (DNFBPs) to implement group-wide anti-money laundering/countering terrorism financing measures. Under the FATF Recommendations, DNFBPs include lawyers, accountants, trust and company service providers, real estate agents, casinos and dealers in precious metals and stones. The CCBE was represented by the AML Committee Chair, Rupert Manhart, who provided comments on the questions asked and reiterated the CCBE’s willingness to comment further on any envisaged amendments to the FATF recommendations.

In the preliminary comments regarding the AML package CCBE is particularly worried about the approach towards self-regulation of the legal sector:

The CCBE is particularly worried about the approach taken towards self-regulation of the legal profession, which is the institutional safeguard and cornerstone of independence of lawyers and the rule of law. In its 2021 Rule of Law report, the Commission considered that: “An effective justice system requires that lawyers be free to pursue their activities of advising and representing their clients, and bar associations play an important role in helping to guarantee lawyers’ independence and professional integrity.”5 The CCBE considers that in order to preserve the Bars’ role, the Commission should be careful when designing its policies in all fields, including in the field of AML/CTF. Furthermore, the CCBE is concerned that the Commission acts based on the assumption that self-regulatory bodies do not provide adequate control.6 The CCBE does not agree with this assumption which, in our opinion, is not based on factual data and does not recognise efforts made by the Bars in preventing money laundering.

5 See 2021 Rule of Law report, page 5, available here.
6 See, in particular, Recital 69, Proposal for 6th AML Directive.

The proposals of the European Commission endanger the independence of thet legal profession, CCBE writes. Amongst others they say:

Furthermore, there is no evidence that European supervision would be more satisfactory than national level supervision and supervision by Bars, in terms of efficiency and effectiveness. One of the major assets of self-regulation of the legal profession is that self-regulatory bodies have a much better understanding of the profession than public authorities or even the proposed AMLA, the latter being a super-supervisor of many financial and non-financial professions. Therefore, as experience has shown in England and Wales for example, an authority such as AMLA risks being a cost-intensive but inefficient additional supervisory authority.

The AMLA would also conduct a “peer review” of non-financial supervisors.12 Whilst peer review has proved to be an effective tool to share best practices, the design of the peer review as provided for by the AMLA Regulation proposal is just an additional assessment by a public authority. The AMLA obviously is no peer to the non-financial professions so that a process designed, managed and controlled by the AMLA does not deserve to be called “peer review”. However, the CCBE is happy to consider and discuss a peer review process which is designed, managed and controlled by the profession itself to enhance AML regulatory and supervisory practice.

12 Article 28, Proposal for AMLA Regulation.

Over Ellen Timmer

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