The Council of Bars and Law Societies of Europe (CCBE) has criticised the supranational risk assessment of the risk of money laundering and terrorist financing (SNRA) released by the European Commission [1].
Read the CCBE’s comments [2]. The organisation quotes Commission claims about lawyers:

“Lawyers are particularly prone to being misused by criminals because engaging a lawyer adds respectability and an appearance of legitimacy to an activity even when the service provided can help criminals launder money.”7
“Criminal organisations do not consider access to legal professionals to be particularly complex. For them, relying on legal professionals’ skills means that they do not need to develop these competences themselves.”8
“Given the very few suspicions reported by lawyers to financial intelligence units, extrapolating useful case studies to exemplify ML/TF threats is difficult. In fact, most cases reported in typologies regarding lawyers or appearing in revelations by investigative journalists refer to situations where the lawyers themselves were found to be actively facilitating money laundering. These typologies confirm nonetheless that risks exist and are very significant.”9

7 SWD(2022) 344 final, page 196.
8 SWD(2022) 344 final, page 197.
9 SWD(2022) 344 final, page 197.

and comments:

With regards to the above conclusions of the SNRA, the CCBE would like to point out that it is unclear which data are these allegations based on. The CCBE has repeatedly requested the Commission to provide empirical background and reliable data sources.

The conclusions are serious as they suggest that it is easy for criminals to use lawyers to legitimise their interests. The report completely ignores that lawyers carry out comprehensive due diligence exercises in order to check their clients, to identify red flags and to ensure compliance with legal provisions.

Moreover, it seems the report is implying that lawyers are participating in ML on a significant scale. The respectability and reputation of lawyers, most of which comply with their AML duties, is therefore negatively affected by such conclusions.

Also read the rest of CCBE’s comments, where they comment on the legal professional privilege and the supervision by self-regulatory bodies.

They respond to the Commission’s idea that the low number of reports would mean that lawyers do not take AML/CFT seriously (an accusation also heard in the Netherlands):

With regards to the above conclusions of the SNRA, the CCBE thinks that, as the report acknowledges itself, it is not appropriate to compare the number of reports from legal professionals to those from the financial sector. However, the CCBE also thinks that it is not appropriate to compare the number of reports from lawyers to the one from notaries.

Notaries file more reports because of the type of activities that are carried out by them – they carry out more activities which fall under AML obligations, more transactions. Lawyers carry out many more activities that are not under AML obligations; it is therefore normal that they have a lower number of reports. There is a difference in the focus of work of lawyers. For instance, in Germany, a new law requires reporting on real estate transactions which are carried out more often by notaries than by lawyers. This results in more reports being done by notaries.

The CCBE would also be interested in knowing what number of reports is expected from lawyers. What level would be considered as high enough?

The CCBE is also of the opinion that there is not necessarily a causal link between the low number of reports and the conclusion that the awareness of the sector is low. Low statistics are not necessarily a proof of a lack of awareness.

The CCBE also notes that it receives contradictory signals regarding reporting. There is a risk of authorities being flooded with bad quality STRs and this overreporting may potentially reduce the effectiveness of their work. According to the feedback CCBE members receive from their national authorities, reports from lawyers are of high quality and allow a follow-up. Therefore, taking into consideration only the quantitative aspect of reporting, as the Commission does, does not reflect the complexity of the issue.

The Commission’s preconceptions about lawyers, which are not evidence-based, are worrying. If the section of the SNRA on lawyers is already so flawed, then the question must be asked what is the quality of the rest of the SNRA. This is very worrying now that, according to European AML/CFT regulations, the SNRA is a guide for assessing risks and that guide may be built on quicksand.

Earlier, I noted that the not-for-profit was incorrectly described in an earlier version of the SNRA [3].

Notes:

[1] Report from the Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (SNRA). It is composed of a report (COM(2022) 554 final) and a staff working document (SWD(2022) 344 final).
[2] CCBE’s comments of 16 February 2023.
[3] The non-profit sector is inadequately covered in new European risk assessment | SNRA-2, European Commission, 25 July 2019.