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1. What is the Law Society’s Money-Laundering Reporting Obligation?

Where the Law Society suspects that an offence under section 31 (see paragraph 3(a) below) or section 32 (see paragraph 3(b) below) of the Criminal Justice Act 1994 or an offence of financing terrorism has been or is being committed by a solicitor, the Law Society is obliged by law to report that suspicion to the Garda Síochána and the Revenue Commissioners.1 Section 32 applies to a practising solicitor when acting in connection with certain categories of transactions, generally those relating to property, business entities, financial assets, securities, companies and trusts.2 In a situation where section 32 does not apply to a solicitor, the obligation on the Law Society to report in respect of a suspected offence under section 32 does not apply. Whether or not section 32 applies to a solicitor has no bearing on the obligation of the Law Society to report in respect of a suspected offence under section 31 or a suspected offence of financing terrorism: in relation to these offences, the obligation to report applies regardless of the nature of the work in which the solicitor is involved.

2. What Constitutes Suspicion for the Purpose of the Money-Laundering Reporting Obligation?

There is no definition of ‘suspicion’ in the legislation. The suspicion is not required to be a reasonable one. Suspicion requires a lesser factual basis than belief, but it must have some factual foundation. Whether or not there was a factual foundation for a suspicion would be tested at the time when the suspicion was formed. It would not be tested retrospectively with the benefit of hindsight. Suspicion does not have to have a basis in admissible evidence. It can legitimately take into account matters that should be excluded in the trial of a case in court. There are no financial thresholds specified and the obligation to report applies regardless of the amounts involved.

3. What Offences Does the Money-Laundering Reporting Obligation Cover?

a) An offence under section 31 is the offence of money laundering. In the context of the Law Society’s reporting obligation, the offence of money laundering requires that the solicitor knew or believed or was reckless as to whether the property in question represented the proceeds of criminal conduct. b) Again, in the context of the Law Society’s reporting obligation, an offence under section 32 is: i) The contravention by the solicitor of section 32, which deals with measures to be taken by practising solicitors to prevent money laundering and the offence of financing terrorism (namely, identification measures, identification evidence retention, and establishment of internal procedures, instructions and training); or ii) The provision of false or misleading information by the solicitor for the purposes of sections 32(3) to (5) when required to do so under section 32. Sections 32(3) to (5) are concerned with the taking of measures to establish the identity of persons for whom certain persons and bodies, generally financial institutions and professional advisers concerned with financial, land and business services, propose to provide specific services, principally services relating to finance, land and business. The offence of financing terrorism is provided for under section 13 of the Criminal Justice (Terrorist Offences) Act 2005. In the context of the Law Society’s reporting obligation, the offence of financing terrorism involves the solicitor unlawfully and wilfully providing, collecting or recovering funds, intending them to be used, or knowing that they will be used, in whole or in part to carry out specified terrorism-related activities.

4. What Types of Activities Might Give Rise to a Money-Laundering Report by the Law Society?

In practice, any suspected criminal activity involving identifiable proceeds of criminal conduct, including tax evasion and mortgage fraud, on the part of a solicitor might give rise to a moneylaundering report by the Law Society. A money-laundering report might also be required in relation to a suspected breach of the provisions of section 32 relating to solicitors’ anti-money-laundering obligations.

5. What are the Law Society’s Responsibilities in Discharging the Money-Laundering Reporting Obligation?

The obligation of the Law Society is to make a money-laundering report where it is suspected that a relevant offence has been or is being committed by a solicitor. In this context, it is only offences that may have been committed by solicitors with which the Law Society is required to be concerned. The Law Society’s obligation does not apply to offences that may have been committed by clients of solicitors. The Law Society is under no obligation to investigate solicitors for the purposes of money-laundering reporting or with a view to uncovering suspicious activities. Where the Law Society discloses in good faith information in the course of making a money-laundering report, the disclosure shall not involve the Law Society in liability of any kind.3 Where a money-laundering report has been made by the Law Society, a person who, knowing or suspecting that such a report has been made, makes any disclosure that is likely to prejudice an investigation arising from the report into whether an offence under section 31 or section 32 or an offence of financing terrorism has been committed shall be guilty of an offence.4 This offence of prejudicing an investigation is often referred to as ‘tipping-off’. The existence of this offence means that the Law Society must ensure a high standard of confidentiality in administering its reporting procedures.

6. What is the Role of the Law Society’s Money-Laundering Reporting Committee?

The Law Society has a Money- Laundering Reporting Committee, which carries out the functions generally vested in the moneylaundering reporting officer in other organisations with moneylaundering reporting obligations. The money-laundering reporting obligations of the Law Society have been delegated to this committee with a duty to report to the Council of the Law Society (on a ‘no-names basis’) on the performance of such obligations. The Money-Laundering Reporting Committee is a stand-alone committee with the sole function of making money-laundering reports.

7. How does the Law Society Meet the Money-Laundering Reporting Obligation in Practice?

The Law Society has an internal procedure whereby suspicion that a money-laundering offence or an offence of financing terrorism has been or is being committed by a solicitor requires the submission of an internal money-laundering report in prescribed form to the Registrar of Solicitors. This report is then submitted to the Money- Laundering Reporting Committee, which decides in each case whether or not a money-laundering report should be made to the Garda Síochána and the Revenue Commissioners. In practice, as might be expected, any suspicion is most likely to arise during an accounts inspection or when dealing with a complaint about a solicitor.

Footnotes

1 Section 57(2) of the Criminal Justice Act 1994. In this practice note, a report made pursuant to the Law Society’s obligation under section 57(2) is referred to as a ‘money-laundering report’. 2 Regulation 3 of, and paragraph 2 of the schedule to, the Criminal Justice Act (Section 32) Regulations 2003. 3 Section 57(7) of the Criminal Justice Act 1994. 4 Section 58(2) of the Criminal Justice Act 1994.