Obligation on lawyers to help combat money laundering

Court of Justice of the European Communities
Published July 2, 2007
Ordre des barreaux francophones et germanophones and Others v Conseil des Ministres (Conseil des barreaux de l’Union europeénne and Ordre des avocats du barreau de Liège, interveners) Case C-305/05
Before V. Skouris, President and Judges P. Jann, C. W. A. Timmermans, A. Rosas, K. Lenaerts, E. Juhász, J. Klucka, J. N. Cunha Rodrigues, R. Silva de Lapuerta, K. Schiemann, A. Borg Barthet, M. Ilesic and J. Malenovsky
Advocate General M. Poiares Maduro (Opinion December 14, 2006) Judgment June 26, 2007

Advice and assistance given by lawyers in financial and real estate transactions that had no link with judicial proceedings were not exempt from the duty to cooperate in combating money laundering.

The Grand Chamber of the Court of Justice of the European Communities so held on a reference under article 234 EC for a preliminary ruling from the Cour d’arbitrage (now the Cour constitutionelle), Belgium, on a question of interpretation of article 2a(5) of Council Directive 91/308/EEC of June 10, 1991 on prevention of the use of the financial system for the purpose of money laundering (OJ 1991 L166/77), as amended by Directive 2001/97/EC of the European Parliament and of the Council of December 4, 2001 (OJ 2001 L344/76).

The claimants applied for the annulment of certain articles of the Belgian law which transposed the Directive, on the ground that they infringed provisions of the Belgian constitution read in conjunction with article 6 of the European Convention on Human Rights, as, inter alia, the obligation on lawyers to inform the authorities if they came across facts which they knew or suspected to be linked to money laundering unjustifiably impinged on professional secrecy and the independence of lawyers.

The referring court took the view that it was first necessary to ascertain whether the Directive on which that law was based was lawful, and in its reference it asked the European Court whether article 2a(5) of the Directive infringed the right to a fair trial guaranteed by article 6 of the Convention.

In its judgment, the Grand Chamber of the European Court of Justice held:

Since the question referred was confined to the legality of the Directive by reference to the right to a fair trial, the Court could not consider other rights such as that to respect for privacy provided for in article 8 of the Convention.

Lawyers would be unable to carry out satisfactorily their task of advising, defending and representing their clients, who would in consequence be deprived of the rights conferred on them by article 6, if the lawyers were obliged, in the context of judicial proceedings or the preparation for such proceedings, to cooperate with the authorities by passing them information obtained in the course of related legal consultations.

However, lawyers were subject to the obligations laid down in Directive 91/308 only in so far as they participated in certain transactions, essentially ones of a financial nature or concerning real estate, listed exhaustively in article 2a(5) of that Directive.

As a rule, the nature of such activities was such that they took place in a context with no link to judicial proceedings and, consequently, those activities fell outside the scope of the right to a fair trial.

Moreover, as soon as the lawyer acting in connection with a transaction as referred to in article 2a(5) was called on for assistance in defending the client or representing him before the courts, or for advice as to the manner of instituting or avoiding judicial proceedings, the lawyer was exempt, by virtue of the second sub-paragraph of article 6(3), from the obligations laid down in article 6(1), regardless of whether the information had been received or obtained before, during or after the proceedings.

An exemption of that kind safeguarded the right of the client to a fair trial.

On those grounds, the Court ruled:

The obligations of information and of cooperation with the authorities responsible for combating money laundering, laid down in article 6(1) of Directive 91/308/EEC, as amended, and imposed on lawyers by article 2a(5), account being taken of the second sub-paragraph of article 6(3), did not infringe the right to a fair trial as guaranteed by article 6 of the European Convention on Human Rights.

http://business.timesonline.co.uk/tol/business/law/reports/article2013305.ece