The Organisation for Economic Co-operation and Development (OECD) and the International Bar Association (IBA) will form a Task Force to develop conduct standards and guidance for lawyers involved in international commercial structures and recommendations for governments. The Task Force will be comprised of lawyers and policy leaders with experience in professional ethics, taxes, anti-money laundering, anti-corruption, financial services, trade and government affairs.
When the International Consortium of Investigative Journalists (ICIJ) published the “Panama Papers” on May 9, 2016 it exposed a landscape with potential land mines for lawyers to unknowingly assist their clients in concealing assets or in laundering money.
The Financial Action Task Force (FATF) has published international standards for conducting due diligence on customers and identifying beneficial owners. However, it’s become obvious these standards are not sufficient alone. Underlying this issue is the professional obligation lawyers have to maintain attorney-client privilege.
In a December 14, 2016 OECD news release IBA President David W Rivkin, said the following: “It is undeniable that lawyers must play a central role in complex offshore financial transactions. To ensure that they do not unwittingly facilitate economic crime, it is imperative that lawyers ask the right questions of their clients, vet them sufficiently, understand who are to be the ultimate beneficiaries of their client’s actions, and have an understanding of sovereign laws. In practice, inevitably complications arise. For example, what are a law firm’s obligations when conflicting sovereign laws apply in cross-border transactions? Recent events have shown that existing international and professional standards may not provide sufficiently clear guidance to lawyers who handle such transactions. Recent actions also present the danger that in their anti-corruption activities, governments may ignore the need for lawyers to advise their clients in confidence. For this reason, the IBA has partnered with the foremost inter-governmental organization analysing and promoting economic policies, the OECD, to create appropriate standards while, at the same time, respect the fundamental rules applicable to the profession that are a key element of the rule of law. Each organization will bring its relevant expertise to the project.”
Some of the questions the Task Force will consider, per the OECD news release, include the following:
What is the legal profession’s role in combatting corruption, tax evasion money-laundering and terrorism financing taking into account relevant international standards professional duties of lawyers and the role that such duties play in preserving the rule of law?
What steps, if any, should lawyers take in the event that acts or transactions previously legal become illegal as a result of a change of law?
What should be the result when – notwithstanding the best efforts from the law firm – the client engages in activities that are legal in one jurisdiction but illegal in another?
What use, if any, may be made of illegally garnered information and what liability do lawyers have for inadvertent breach of client confidentiality?
What steps should governments take to provide transparency of such transactions while recognizing legitimate attorney-client privilege and professional secrecy?