Anti-money laundering law causing ‘havoc’ in the family courts

One family barrister reported that he had three trials cancelled this year so far as a result of “last minute” disclosures made to the National Criminal Intelligence Service (NCIS).

“The Proceeds of Crime Act offends every professional bone in my body which all tell me that client confidentiality is sacrosanct,” Nicholas Miller told The Lawyer in a special feature about the concerns of family lawyers about POCA to be run next week. “But from an administrative point of view it has turned out to be a nightmare as well.”

Three of his trials had to be pulled shortly before the start dates following reports to NCIS which he believed were trivial in nature but, nonetheless, derailed the legal actions. “The crime that we commit, and for which we are potentially liable for up to 14 years in prison and an unlimited fine, is dealing with the proceeds of crime or being concerned with an arrangement on an unauthorised basis. So what we are asking for is authorisation to proceed [from NCIS],” he says. “If this information comes through late, for example, within 48 hours of the start date of trial then you’re scuppered.”

The controversial legislation extends the scope of a solicitor’s obligation to report suspicions of crime beyond major drug money laundering operations to potentially any crime. Under the Act, to avoid the risk of prosecution a lawyer must disclose to NCIS any suspicions that a client’s property may be criminal. Divorce lawyers have been up in arms about the legislation since last October’s ruling from Dame Elizabeth Butler-Sloss in P v P which made clear that the law required lawyers to report even the smallest tax evasions – such as paying tradesmen or nannies in cash. Next week the Money Laundering Regulations 2003 come into force and introduce a new offence of ‘failing to report’ under the legislation.

Earlier this month LawZone spoke to David Burrows, the sole practitioner who stood down as chair of the Solicitors Family Law Association week over the group’s refusal to challenge the government over POCA which, he claimed, turned “solicitors into government narks”. He argued that forcing family lawyers to disclose their clients’ financial details to the authorities was incompatible with the Human Rights Act, breaching the principle that client information should remain privileged. The sole practitioner is planning to launch a challenge by way of a High Court declaration of incompatibility with the Human Rights Act.

Family law specialists claim to be making disclosures on a very regular basis, but they fear that far from assisting NCIS in its fight against serious money laundering, such disclosures simply make its job more difficult. “Many practitioners are totally confused about what they should or shouldn’t be doing,” reckons Marcus Dearle, a family law partner at Withers. “Meanwhile NCIS is totally under-funded and understaffed and the whole process is in a shambles. Technically, you are supposed to report anyone, even the cleaning lady, and I fear that the real villains are getting away with their crimes because of the smokescreen of all this confusion.”