The Law Society is lobbying the European Union (EU) to change its "heavy-handed" redrafting of the money laundering directive.
The 1991 EU Directive on Money Laundering is being updated to include all lawyers, as well as widen the scope of illegal activities it covers. It currently only applies to lawyers involved in investment and focuses predominantly on money laundering through drug trafficking.
But the Law Society and the Council of the Bars and Law Societies of the EU (CCBE) are concerned that professional privilege will be eroded to the detriment of clients as well as practitioners.
The directive, as it currently stands, says professionals, including lawyers, must report anything that is even remotely suspicious. It is also not clear at what stage lawyers will be obliged to report misdemeanours.
The Law Society's deputy head of EU affairs Che Odlum says: "This is part of a world-wide clampdown on money laundering and it is a very popular directive."
But she hits out at what she terms the "heavy-handed" approach of the legislation, adding: "The directive is coming so there is nothing the Law Society can do about that. But what we can do is take pre-emptive measures by lobbying Parliament and the commission."
Louise Delahunty, Peters & Peters partner and chair of the Law Society's Serious Fraud and Money Laundering Task Force, fears the directive could mean lawyers will have to warn clients at first interview that they may report them.
She adds: "We accept the legislation will come into force and that the profession should be responsible but on the other hand if you wish lawyers to be more vigilant then please make sure they can still do their job properly."
The Finance Ministers' Council (Ecofin) is meeting in Brussels to discuss the draft legislation on 29 September. The redrafted directive is expected to come into effect in 2002.
Delahunty says the EU is "understanding of our concern", but adds that there will need to be further discussions and proposed amendments for the Law Society and CCBE to be happy with the legislation.