alexa Lawyers duty-bound to support money laundering amendment - Daily Nation

Lawyers duty-bound to support money laundering amendment

Thursday June 27 2019

money laundering

There is no legal service known as “money laundering”. Lawyers who dabble in the laundry of dirty funds do so as criminals. PHOTO | FILE | NATION MEDIA GROUP 

MICHAEL KURIA
By MICHAEL KURIA
More by this Author

When I was in law school in 2004, there was immense brouhaha in legal circles about a law proposed by the then-minister for Finance, David Mwiraria, requiring lawyers to collect VAT as well as issue ETR receipts in a bid to curb tax evasion.

FORMAL DISCLOSURE

This law was condemned by lawyers as an assault on advocate-client privilege, an attempt at turning lawyers into investigators and a threat to the very existence of the legal profession. Ultimately, the courts ruled against lawyers and held that public interest and the protection of tax administration were superior to these concerns.

Fifteen years later, we are being treated to ‘Act Two’ of the legal theatre. This time, the maligned law is an amendment requiring lawyers to report suspicious transactions by their clients. This is, by no means, a radical proposal. In Sub-Saharan Africa, only Kenya and Mozambique do not impose the reporting obligation on lawyers.

Statements by lawyers about this law, like in 2004, are just word salads made of complex legalese and inscrutable Latin designed to bamboozle rather than inform the public.

Let’s untoss the salad and see whether these justifications have merit. Advocate-client privilege is an important device for the protection of Kenyans. However, it is not absolute and has various exemptions. Section 134 of the Evidence Act states that this privilege ceases to exist where communication between a lawyer and his client is made for the furtherance of a crime.

Advertisement

A lawyer is allowed to disclose “any fact observed in the course of his employment showing that any crime or fraud has been committed”. The proposed amendment merely creates a formal disclosure mechanism. In any case, this privilege does not belong to lawyers but clients, who can waive it.

WAIVE PRIVILEGE

Client confidentiality is routine practice for all professionals. Accountants, for instance, have an even more intimate knowledge of their clients’ finances. Section 30 of the Accountants Act prohibits accountants from disclosing client information that comes to their knowledge. Yet, Section 48 of the Proceeds of Crime and Anti-Money Laundering Act (Pocamla) mandates them to report suspicious transactions by their clients.

Embraced their responsibility

Accountants have embraced their responsibility and lend their considerable expertise to the national Anti-Money Laundering Advisory Board. ICPAK is a supervisory body for the purposes of Pocamla. If lawyers stop obstructing common sense legislation, LSK could become a supervisory body for the purposes of the Act and liaise with the Financial Reporting Centre to process disclosures on their behalf.

The assertion that the legal profession faces a mortal danger if lawyers are brought under Pocamla is baseless prognostication. Prophecy is generally a poor substitute for experience. Would the profession die if every client waived privilege? What powers of clairvoyance have lawyers used to decide that clients will not waive privilege?

CRIMINAL UNDERWORLD

Legal professions have not ceased to exist in the numerous countries where similar laws have been passed. The only people who have faced difficulties are criminals.

There is no legal service known as “money laundering”. Lawyers who dabble in the laundry of dirty funds do so as criminals. And those who use their chambers as extensions of the criminal underworld are the greatest threat to the profession. Asserting otherwise is as ridiculous as a doctor who peddles cocaine insisting his customers are his patients, their relationship is confidential and his prosecution an illegal assault on the practice of medicine.

As for turning lawyers into investigators, all of us have the civic duty to report crimes we witness being committed. Even if lawyers had the absolute right (which they don’t) not to report crimes, such privilege would have to be dismantled.

Ultimately, it is not about maxims, doctrines or winning arguments but achieving results in the fight against corruption. Lawyers need to join the rest of the country in this fight.

Mr Kuria specialises in the prevention, detection and disruption of complex transnational financial crime. [email protected]

Advertisement