FINANCE COUNCIL: LAWYERS, ACCOUNTANTS CAUSE PROBLEMS WITH MONEY-LAUNDERING DIRECTIVE.

This draft Directive, tabled by the European Commission on 14 July 1999, seeks to update the 1991 EU Directive, taking account of the increasing liberalisation of the financial markets. The European Parliament on 5 July adopted thirty-three amendments in its first reading of the draft Directive, which falls under the co-decision procedure. The Parliament has proposed obliging lawyers to report suspicious financial transactions when carrying out operational functions (opening a bank account, buying property etc), but not when offering legal advice or representing their client in legal proceedings. They favour accountants having the same obligations as financial institutions. The Parliament deleted the paragraph obliging Member States' anti-money laundering authorities to exchange information with the Commission (see European Report No 2515 for more details).At the 17 July Ecofin Council, the one area on which there was universal agreement was in extending the terms of the Directive beyond drug trafficking to encompass proceeds derived from all organised crime. However, the UK was insistent that tax evasion should be considered as one of these criminal activities. The French Presidency had proposed a set of Conclusions to be adopted at the Ecofin Council, but Member States in the event did not adopt them. The first of these conclusions set a target date of September for reaching political agreement on the common position. Germany was unwilling to accept this time-table, suggesting that the 17 October Council of finance and justice and home affairs Ministers would be a more suitable occasion.Turning to the legal profession, all Member States agree that lawyers representing their clients in legal proceedings should not be included in the Directive. The majority of Member States support the inclusion of lawyers when they act as independent advisors to clients on financial and property matters. However, Germany, Austria, Spain and the Netherlands are firmly opposed to this proposal. They argue that such a provision would require them to amend their own constitutions, which enshrine the principle of "lawyer's secrecy". Furthermore, it may contravene Article 6 of the European Convention of Human Rights, relating to a person's right of defence.As regards where accountants...