Solicitors convey concerns over AML/CTF obligations
Lawyer-client confidentiality brought into question as AUSTRAC advises to 'err on the side of caution'.
REPORTING an AML/CTF client breach is causing some “tensions” across the legal fraternity.
A recent virtual AML/CTF summit, co-sponsored by Australian Conveyancer, has exposed the concerns surrounding Suspicious Matter Reports.
The legal profession is worried that reporting a client might breach lawyer-client confidentiality.
“We’ve thought long and hard about this,” Bobbie Wan, Law Society of NSW’s head of regulatory policy, told the summit.
“I think it’s quite natural and not unexpected that there would be some tension.
“The regime that operates the AML framework was crafted with different objectives than the one that governs the legal profession.
“I don’t think those tensions are insurmountable but they need to be navigated carefully.”
A recent Law Society Journal article explains a law practice might be subject to both the AML/CTF Act and the Privacy Act.
“What this means is that legal practices … have to simultaneously navigate two new sets of regulatory obligations,” the LSJ said.
“They no longer fall within the small business exemption of the Privacy Act and will need to comply with the 13 Australian Privacy Principles.”
Among other things, those principles govern the collection, use and disclosure of personal information.
That includes financial detail: the type of information required to assist a client to buy real estate, or a business.
“One of the biggest tensions we’re seeing is in relation to Suspicious Matter Reports,” Wan said.
She pointed out that a lawyer who abruptly drops a suspicious client could effectively be tipping them off, which is an offence.
But to continue acting for the client invites a conflict of interest.
“You can’t act in your client’s best interests if you realise, oh, I’ve got to make a Suspicious Matter Report,” she added. “It goes against a solicitor’s paramount duty.”
Compliance expert Richard Storey, of Grant Thornton Australia, agreed there were “grey areas” in most affected professions, including conveyancing.
Despite good advice from AUSTRAC and professional bodies, he said: “There are specific situations that don’t quite fit into the little boxes.”
The Law Society has published additional guidance for members, while AUSTRAC concedes it’s a difficult matter.
“We would advise lawyers to err on the side of caution,” AUSTRAC chief executive Brendan Thomas told the summit.
“We don’t want people to breach their professional obligations and we certainly don’t want legally privileged information in our data system.
“My advice is to speak to your professional bodies about it.”
