Because of their position within the justice system, the work they do and, therefore, the special nature of the relationship with their clients, lawyers are subject to particular ethical and legal responsibilities.
There will be times when there will be contradictory contradictions between the ethical responsibilities of a lawyer to his clients and the obligations imposed on lawyers under the 2009 Anti-Money Laundering and Combating Financing of Terrorism Act (AML/CFT Act).
A lawyer facing suspicions about the planned activities of a client may need to make some tough decisions about what data to report under the AML/CFT regime and whether they should report at all. This briefing discusses some of the concerns to be considered by lawyers and measures to be taken. There is also a Fraudulent Transactions and Activities Guide from the Law Society that could be helpful.
On 8 June 2018, the Financial Intelligence Unit of the New Zealand Police published a Suspicious Activity Reporting Manual 2018 and this provides valuable information. In 2018
Trustworthiness
Lawyers are subject to strict professional confidentiality obligations. These are expressed in RCCC Chapter 8. An attorney must keep all data regarding the affairs of clients in trust forever.
There are limited exceptions to this provision, which are provided for in the RCCC. These exceptions include compulsory disclosure where information relates to the proposed commission of a crime punishable by imprisonment for a term of three years or more, or where disclosure is required by law (see Rules 8.2(a) and (d).)
Also, a lawyer must “not knowingly help in concealing fraud or crime” (rule 2.4).
Legal Privilege
The long-established common law defense given to lawyers’ clients by legal professional privilege is linked to the relationship of confidence and trust (LPP).
As more than a rule of proof, LPP has been established. It is a human right which provides a client with the required conditions to discuss matters thoroughly with their lawyer. In the understanding that these conversations will not be leaked or coerced, the client is free to report all related matters to their lawyer safely.
LPP absolutely precludes contact between a lawyer and a client from being revealed without the client’s consent for the purpose of obtaining or receiving legal assistance.
Privilege and secrecy under the AML/CFT Act
The provisions of the recently amended AML/CFT Act illustrate LPP’s fundamental significance by expressly removing privileged communications from the scheme of disclosure provided for by the legislation.
Lawyers are allowed by the AML/CFT Act to file reports of suspicious activities. These are classified as allegations of suspicious behavior (SARs). However, lawyers are not forced to reveal any data that the lawyer feels is legally protected information on ‘fair grounds’ (section 40(4) of the AML/CFT Act).
Moreover, nothing in the AML/CFT Act allows privileged information to be revealed to the AML/CFT supervisor (the Department of Internal Affairs is the supervisor for lawyers).
Non-privileged sensitive information falls in a separate category. Non-privileged but sensitive information must be revealed under the AML/CFT Act. This is consistent with the required confidentiality disclosure exemption laid down in RCCC rule 8.2. (d).
‘Privileged messaging’
Any lawyer who considers the extent of his or her disclosure obligations may need to decide what data is likely to be privileged (taking into account the constitutional requirement that a lawyer have ‘fair reasons’ for such an evaluation).
The AML/CFT Act protects the disclosure of ‘privileged messages’. In section 42, ‘Privileged Communications’ is established. The definition is compatible with the LPP definitions found in the 2006 Proof Act (see sections 54-56). The term encompasses the existing definitions of privilege for legal advice and privilege for litigation.
Privilege for Legal Advice
In section 42(1)(a) of the AML/CFT Act, legal advice privilege is given for (consistent with section 54 of the Evidence Act). This protection applies to confidential correspondence made between the lawyer and the client in the process of obtaining or offering legal assistance or advice, and for the purpose of obtaining or providing it.
Essentially, the requirements for the right of legal advice are:
That the lawyer holds a valid certificate of practice;
That, in the course of and for the purposes of accessing professional legal services, the document for which privilege is sought must have come into existence; and
That it is intended that the correspondence is confidential.
Privilege from litigation
Section 42(1)(b) of the AML/CFT Act acknowledges the right of litigation (consistent with section 56 of the Evidence Act).
The privilege safeguards relations between a lawyer and his client. In relation to the right of legal advice, it often applies to correspondence with third parties concerning the planning of court proceedings. It helps lawyers and their clients, without fear of exposure to their critics, to openly collect facts and prepare their case.
The requirements for privilege in litigation are basically:
That the contact or information came into being when litigation was either already in progress or was “reasonably apprehended” (meaning it is a significant or practical prospect); and that the “dominant purpose” for the production of the document must have been to encourage the legal adviser of the client to plan for the lawsuit, prosecute the case or advise the client on the litigation.
In order to prepare facts to promote or defend proceedings, litigation protection is only limited to correspondence made, or information compiled.
When privilege is not applicable
If a lawyer has fair grounds to assume that consumer data is a ‘privileged contact,’ this must not be revealed in any SAR or to other entities or organizations working under the AML/CFT regime. However, in such cases, the immunity afforded to ‘privileged communications’ would not apply.
If a contact is not a protected communication, Section 42(2) of the AML/CFT Act specifies. The disclosure is not privileged: (a) where there is a prima facie case where the disclosure or disclosure is made or received, or compiled or prepared; I for fraudulent purposes; or (ii) where there is a prima facie case where the disclosure or disclosure is made or received or compiled or prepared; or (b) where the disclosure consists entirely or partly of or relates to the receipts, payments, revenue, expenditure, or financial transactions of any SPS.
Dishonest motive
It has long been agreed by common law that it is not in the interests of justice to shield records made for a dishonest purpose. This relates to both the right of legal advice and the privilege of litigation.
Although the term “dishonest purpose” is not specified in the AML/CFT or Evidence Acts, an objective test has been applied by the courts, which clearly considers whether the party did not behave in the circumstances as an honest individual.
Dishonest motive involves things less than, as well as distinct from, an offence.
In JSC BTA Bank v Mukhtar Ablyazov et al.[2014] EWHC 2788, clear prima facie proof of advice relating to concealment and deception in relation to the properties of a client contributed to the denial of privilege. The case agreed that the lawyer may mislead him or herself with regard to the intent of the advice.