CLIENT IDENTIFICATION RULES OF THE NETHERLANDS ANTILLES TO BE EXTENDED TO ATTORNEYS AND CIVIL-LAW-NOTARIES
Further anti-money laundering measures
In the context of the fight against money laundering, the Netherlands Antilles will adopt legislation in the course of 2007 which extends the identification obligation and the reporting obligation in respect of unusual transactions to attorneys, civil-law-notaries, accountants, insurance companies and brokers, realtors, car dealers and jewelers.
The obligations as imposed by law entail that these advisors are required to identify a client before they may provide their advisory services. The actual implications of the new legislation are as yet unclear in a number of respects.
Important regulation regarding anti-money-laundering (“AML”) in the Netherlands Antilles are:
- Article 1 to 4 of the National Ordinance Penalization Money Laundering (Landsverordening Strafbaarstelling Witwassen van Geld, “NOML”) which criminalize money laundering;
- The National Ordinance on the identification with Financial services (Landsverordening identificatie bij de financiële dienstverlening, “LIF”) that apply to service providers (natural persons/legal entities), which offer financial services to a client (a natural person or legal entity). Penalization of violation or non-compliance with LIF is described in article 9 LIF;
- The National Ordinance on the Reporting of Unusual Transactions (Landsverordening Melding Ongebruikelijke Transacties, “LMOT”). This obligates anybody who offers financial services to report “unusual transactions” to the Financial Intelligence Unit (Meldpunt Ongebruikelijke Transacties). Penalization of violation or non-compliance with LMOT is described in article 23 section 1 and 2 LMOT; It is prohibited to notify the client of such disclosure; and
- Of relevance as well are the Provisions and Guidelines on the Detection and Deterrence of Money Laundering and Terrorist Financing for Credit Institutions issued by the Central Bank of the Netherlands Antilles.
Please note that the International Convention for the Suppression of the Financing of Terrorism, effected in New York on 9 December 1999 has been approved for the entire Kingdom. Any person commits an offence within the meaning of this Convention if that person by any means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out an act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex to this Convention.
As far as the draft legislation is concerned, point is of course, that lawyers and civil-law-notaries are obliged to confidentiality, also on the basis of the Criminal Code. Although the protection is not unlimited, the obligation of secrecy is a vital element of the exercise of the legal profession. It is not yet clear how this will be dealt with. Measures to safeguard this privilege need to be discussed. Also, a transitional arrangement has to be discussed.
In the Netherlands, attorneys (lawyers) and civil-law-notaries are subject to certain anti-money laundering rules as of 1 June 2003. These rules require the prior identification of clients before any service is provided to the client in or from the Netherlands as well as reporting of suspected laundering of money obtained from criminal activity. There is no obligation to identify clients or disclose unusual transactions when the legal advisor acts as the client’s legal representative in a court procedure and/or if the services are limited to giving advice to a client as far as it concerns his legal position.
Karel Frielink
Curacao-based Attorney (lawyer) / Partner
Additional information regarding attorneys / lawyers working in the European Union (20 March 2007)
NEWS RELEASE INTERNATIONAL BAR ASSOCIATION
The Global Voice of the Legal Profession
IBA voices concern at a European Commission Meeting over the difficulties on the application of Anti-Money Laundering Legislation to the legal profession.
The International Bar Association’s (IBA) Anti-Money Laundering Legislation Implementation Group (AMLLIG) recently participated in a meeting with the Committee on the Prevention of Money Laundering and Terrorist Financing of the European Commission, Internal Market and Services DG, on the application of the anti-money laundering rules to the legal profession. This Committee, created by Directive 2005/60/EC (The Third Directive) is composed of Member States delegations and chaired by the Commission services.
The European Commission organised the meeting to discuss issues of common interest to both legal practitioners and to Member States, with a view to prepare for the implementation of the Third Directive in Europe before 15 December 2007’s deadline. The meeting was broadly divided into four sessions for ease of discussion: debriefing on the Financial Action Task Force (FATF) meeting held on 7-8 November 2006, presentation of the Commission staff working document on the application to the legal profession of Directive 2001/97/EC (The Second Directive), presentation by the AMLLIG on difficulties related to customer due diligence (client acceptance and performance by third parties), and presentation by the Council of Bars and law Societies of Europe (CCBE) on difficulties related to reporting. Participation of outside bodies is unusual and the IBA were honoured to be invited to make a presentation to the meeting.
Mariano Fernandez Salas, of the European Commission Internal Market and Services DG responsible for financial crime presented the report on the impact of the Second Directive on the legal profession, as required by article 2 of the Second Directive. The Second Directive extended anti-money laundering rules to the legal profession. However, implementation is proving challenging in some countries and particular concerns have been expressed by the legal profession. The Commission report highlighted the difficulties to assess the effectiveness of the rules with respect to the legal profession due to the slow implementation of the directive by member states and the low number of responses received by the Commission. The Commission report concluded that future efforts should concentrate on: a) improving the quality of the national legislation implementing the anti-money laundering rules adopted at the European level, b) increasing outreach and awareness efforts, and c) exploring whether there are additional tools that can be used in facilitating compliance.
The AMLLIG was invited to participate as an expert and provide examples regarding practical difficulties regarding the effects on cross border services for existing clients, the introduction of a client between professionals, and the practical examples of the inability to verify clients from an independent source.
Stephen Revell, Chair of AMLLIG confirmed, ‘the AMLLIG is very supportive of the international flight against money laundering. However, the current process for CDD places an unnecessary administrative burden on the legal profession as different approaches taken by member states in Europe leads to confusion amongst clients, unnecessary costs and regulatory arbitrage, thereby hampering cross border services. There is also a tension between the risk based approach and document gathering’. He added ‘guidance from enforcement authorities concerning AML scenarios and typologies is very much needed.’ He also underscored the need for more bars to focus on information dissemination and training including as part of law school curricula.
The CCBE reiterated that one of the greatest issues affecting lawyers was the obligation to report suspicious transactions. The CCBE argued that such an obligation breached the principle of the attorney-client relationship – which lies at the core of the legal profession worldwide; severely harms the rule of law and democracy; and impairs access to justice. Mr. Revell added ‘we need evidence that lawyers are unwittingly being used to facilitate money laundering activities which would justify reporting obligations on the legal profession – if they are knowingly involved they will be liable as a primary offender.’
The meeting, held on 13 February 2007 in Brussels, was attended by representatives from the European Commission, member states delegations, various bar associations, including the Council of Bars and Law Societies of Europe.
Representatives from the Commission welcomed the input of the AMLLIG and made clear that different approaches to the transposition of the Second Directive should be harmonised wherever possible pursuant to Article 15 of the Third Directive.
Stephen Revell of Freshfields Bruckhaus Deringer; and Valentina Zoghbi, IBA Project Lawyer attended the meeting on behalf of the IBA AMLLIG
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