AUTHORS
Fortune I. Ugwumba Esq (Senior Associate – Starlion Legal, Abuja);
Eunice Ndenati Jauro (Intern – Starlion Legal, Abuja)
ABSTRACT
This article seeks to catechize the recent Money Laundering (Prevention and Prohibition) Act 2022 signed into law by the President of the Federal Republic of Nigeria as it affects attorney-client privilege and disclosures.
This work is a clear critique of section 11 (4) of the Money Laundering (Prevention and Prohibition) Act 2022.
The authors argues that the provision of the new anti-money laundering (“AML”) law that contradicts the principles of attorney-client privilege and principle of confidentiality enshrined the Legal Practitioners Act (LPA) in extension Rules of Professional Conduct (RPC) for Legal Practitioners and the Evidence Act 2011 should not hold sway over legal practitioners and to that extent urges the court to declare that section 11 (4) of the new AML law invalid and inconsistent as it did with Section 5 of the Money laundering Act 2011.
INTRODUCTION:
Below is an extract of the relevant provisions of the new anti-money laundering law we seek to discuss.
Section 11 (4) of Money Laundering (Prevention and Prohibition) Act 2022
“Legal professional privilege and the invocation of client confidentiality shall not apply in connection with –
- Purchase or sale of property
- Purchase or sale of any business
- Management of client money, securities or other assets
- The opening or management of bank, savings or securities accounts.
- Creation, operation or management of trusts, companies or similar structures;
- Anything produced in furtherance of any unlawful act”.
All over the world, legal practitioners carry out vast nature of professional duties in favour of their clients. In discharging these duties, a legal practitioner owes a duty to the State, the Court, their client, third parties, and other practitioners.
The relationship that exists between a legal practitioner and his client can be termed a fiduciary relationship – a relationship wherein the duty of care and confidentiality is core for the sustenance of that relationship. Furthermore, the duty a legal practitioner owes his client is based on the need for such practitioner to give their best in their client’s interests, whilst also having regard to their other duties.
As a recipient of sensitive information that pertains to clients, their business and different endeavours, a legal practitioner is required by doctrines of “attorney-client privilege” and the “duty of confidentiality” enshrined in the LPA, RPC[1] and Evidence Act 2011[2] to protect the privacy of information provided, by their client.
The authors argues that the principle of privacy, confidentiality and attorney-client privilege was first enshrined in the Constitution of the Federal Republic of Nigeria, 1999 (as amended)[3] and to that extent the wordings of Section 11 (4) of Money Laundering (Prevention and Prohibition) Act 2022 falls short of the requirements for disclosure of privilege information contained in the various laws in Nigeria.
SECTION 11 (4) OF MONEY LAUNDERING (PREVENTION AND PROHIBITION) ACT, 2022 AND ATTORNEY – CLIENT PRIVILEGE.
We have previously mentioned that the doctrine of attorney – client privilege is one that has universal recognition.
Lawyers are the backbones of the legal system and defenders of the rights of citizens. The trust bestowed on a lawyer by a client is one needed by the lawyer to function optimally in discharging his service to his clients. Information disclosed by a client to the legal practitioner in the course of his employment are secured under the principles of attorney – client privilege and therefore not open to third parties unless the consent of the client is sort and obtained.
The Cornell Law School – Legal Information Institute[4] defined attorney-client privilege as the legal privilege that works to keep confidential communications between an attorney and their client private.
It therefore follows that with security of the privilege, the client may speak frankly and openly to his lawyer, disclosing all relevant information to the lawyer and creating a “zone of privacy”.
In other words, shielded by the privilege, the client may be more willing to communicate to lawyer facts that might otherwise be suppressed. This candor and honesty will assist the lawyer in providing more accurate, well-reasoned advice/service, the client can be secured in the knowledge that his statement to his lawyer may not be taken as an adverse admission or use against his interest.[5]
As forward as the attorney-client privilege may seem, it is not absolute. A legal practitioner may be required to divulge of confidential information if required to do so by a court or by law without his client’s consent. Such instances include compliance with a court order, any other law and to aid the prevention of a crime or fraud.[6]
The dichotomy however comes to play in the new anti-money laundering (AML) law[7] which provides attorney – client privilege shall not apply in certain transactions.
The wordings of that provision do not suggest that disclosure shall be made if the transactions were illegitimate or romanced by fraud, no it doesn’t!
What it does suggest is that in matters relating to proviso (a), (b), (c), (d) and (e) whether or not it relates to illegality or fraud, disclosures must be made by a legal practitioner with or without the consent of his client.
For this reason, the authors opine that the new AML law does not satisfy the conditions in the constitution, the Evidence Act, the Legal Practitioners Act and other laws governing attorney – client privilege.
In the unreported of case of CENTRAL BANK OF NIGERIA V. NIGERIAN BAR ASSOCIATION, ATTORNEY GENERAL OF THE FEDERATION [8], the Court of Appeal per Abdu Aboki JCA (now JSC) while nullifying section 5 of Money Laundering Act 2011 confirmed that the said section violates the duty of confidentiality imposed upon a lawyer by Legal Practitioners Act, Evidence Act and RPC inter alia:
“Textually and conceptually, the whole body of section 5 of the Money Laundering Act cannot be said to be intended for legal practitioners who have no business reporting client/legal practitioner relationship to a Minister in charge of Federal Ministry of Commerce, Trade & Investment”
The fact of the case is that section 25 of the Money Laundering Act, 2011 makes it mandatory upon legal practitioners to make disclosures to Minister in charge of Federal Ministry of Commerce & Investment, transactions conducted with their clients. The court unreservedly in a strong term nullified the section because it negates the principle of attorney-client privilege and in anyway, the Evidence Act and Legal Practitioners Act adequately provides for instances where such disclosures can be made.
In the same vein, the authors posit that section 11 (4) of the Money Laundering (Prevention and Prohibition) Act 2011 which eradicates the doctrine of client’s confidentiality and attorney – client privilege cannot be observed as a valid law.
The provisions of the Legal Practitioners Act, Evidence Act and the new AML law insofar as it relates to legal practitioners cannot function side by side as they are opposite of each other. As a matter of fact, unless and until the Legal Practitioners Act is amended, Section 11 (4) of Money Laundering (Prevention and Prohibition) Act 2022 cannot curtail or short circuit the continuous application of the Legal Practitioners Act as it relates to attorney – client privilege.
ANTI-MONEY LAUNDERING LAWS & LAWYERS IN OTHER JURISDICTION
In some other jurisdictions such as Albania, preserving the independence of the legal profession, protecting legal professional secrecy and confidentiality of client is of paramount. The law provides that it is the obligation of the lawyer to report and disclose information on client’s possible involvement in money laundering or terrorist financing. As a rule, even though the legal provision does not provide so, the lawyer should first inform to the Chamberas the authority that should evaluate the information provided by the lawyer and decide whether or not forward it to the national authorities. After taking into consideration whether or not there is a suspicion of money-laundering or it appears that the information reported was received in the course of lawyer’s activities excluded from the scope of the obligation to report suspicions, the Chamber can decide, as the authority for the protection of lawyer’s interests, to forward or not such information to the authorities.[9]
In the United State of America on the hand, the law is unwilling to dilute legal professional privilege, which in turn poses the danger that these lawyers will be seen as the involuntary facilitators to the money laundering excerpts of their clients which they are bound to “protect”.
In as much as the U.S. treasury has reiterated its desire to address the role of designated non-financial businesses and professionals, including lawyers and accountants, in the prevention of money laundering and terrorist financing, the U.S. anti-money laundering legislation however, does not presently incorporate such matters. This is the inadequacy of the Financial Action Task Force (FATF) to clearly define the role and work of the legal profession within their 40+9 recommendations.
Also, the American legal system regards legal professional privilege as fundamental to the lawyer-client relationship. Therefore, it is reluctant towards modifying its current anti-money laundering legislation to include professionals such as lawyers.[10]
In China, the anti-money laundering regulators include: China Securities Regulatory Commission (CSRC), People’s Bank of China, and Ministry of Public Security etc. The laws regulating money laundering include Anti-Money Laundering Law of the People’s Republic of China (Issued on 31 Oct 2006 and effective on 1 Jan 2007).
However, on 13 July 2008, the People’s Bank of China (PBC) issued the Circular on Strengthening the Anti-Money Laundering Supervision of Designated Non-Financial businesses, institutions which came into force upon issuance of the circular.
The Circular generally states that law firms carrying out or preparing for transactions for their clients concerning the buying and selling of real estate or business entities, management of money, securities accounts of clients, organization of contributions for the creation or operation of enterprises, are considered to be Designated Non- Financial Institutions with Anti-Money Laundering (AML) and Counter Financing Terrorism (CFT) obligations. However, the new rule doesn’t provide detailed stipulations as to the specific AML/CFT obligations imposed on lawyers and law firms remain quite unclear.[11]
Lawyers in China are necessary not expected to divulge client information but are expected to report or reveal information from client which relates or pertains to endangerment of public/state security such as financing terrorism.[12]
RECOMMENDATION
Following the passage of Money Laundering (Prevention and Prohibition) Act 2022, the existing law established in Central Bank of Nigeria V. Nigerian Bar Association, Attorney General of The Federation[13] currently holds no ground as the regulatory bodies charged with enforcing the new AML can exercise power over attorney – client privileged information by compelling lawyers to make certain disclosures.
The authors therefore recommend that the Nigerian Bar Association should be much proactive by challenging in particular section 11(4) of the Money Laundering (Prevention and Prohibition) Act 2022 in the court of law, just like it did with the previous Money Laundering Prohibition Act 2011.
[1] See Rule 19 of the Rules of Professional Conduct for Legal Practitioners
[2] See Section 192
[3] See Section 37
[4] https://www.law.cornell.edu/wex/attorney-client_privilege
[5] https://thenigerialawyer.com/revisiting-rule-19-of-the-rules-of-professional-conduct-for-legal-practitioners-2020-as-altered-a-textual-analysis-of-lawyer-client-confidentiality-rule/
[6] Section 192 (1) {a} of Evidence Act 2011; Rule 19 (3) of the Rules of Professional Conduct for Legal Practitioners
[7] Section 11 (4) of Money Laundering (Prevention and Prohibition) Act 2022
[8] (CA/A/202/2015)
[9] https://journals.openedition.org/revdh/6549
[10] https://www.anti-moneylaundering.org/lawyers_and_money_laundering.aspx
[11] https://www.anti-moneylaundering.org/asiapacific/China.aspx
[12] Article 38 of PRC Laws on Lawyers
[13] CA/A/202/2015
STARLION LEGAL 