(Article published in the Feb 28, 2007
issue of Manila Standard Today)
too long ago, lawyer Vicente Aquino, executive director of the Anti-Money
Laundering Council, was seen on evening television reporting that he had
written to the Supreme Court to see how lawyers could be made to report to
the AMLC transactions of their clients, which qualify as “suspicious”
under the Anti-Money Laundering Law.
The footage, despite the subject matter being more important, was
not even a small fraction of what media presently gives to wanna-runs in
the coming elections in May. As
a result, Aquino came out, unfairly to him, like a power wielder and his
message appeared to be in disregard of the complex issues involved in a
I got a copy last Friday of Vic Aquino’s communication to the Supreme Court and it is clear to me, after having read it, that the abbreviated reportage definitely did not do justice to either Vic or his message. True, he wanted to explore ways of getting lawyers involved in the country’s anti-money laundering efforts. But, definitely false, that he was espousing modes of involvement that would violate the sacredness of a client’s confidential relationship with his client.
Actually, the letter to the Supreme Court was sent to and received by the Supreme Court more than five months ago. It was addressed to the then Chief Justice Artemio Panganiban. All Vic did was to inform the Supreme Court that sometime this year or next, the Philippines will be evaluated by the Asia Pacific Group of the Financial Action Task Force for its cooperation in putting in place FATF’s revised 40 recommendations on money laundering and the nine special ones on terrorist financing.
Showing utmost deference to the independence of the tribunal, Vic wrote, “We would appreciate any assistance that the Honorable Supreme Court can extend to the Anti-Money Laundering Council [AMLC] in addressing the FATF’s additional concerns by requiring lawyers and notaries to comply with the due diligence and record-keeping requirements and to report suspicious transactions to the AMLC according to the guidelines laid down by Recommendation No. 12 of the FATF’s Revised 40 Recommendations…” Then followed the text of the revised Recommendation No. 12.
When the 40 Recommendations were revised in 1996 and later in 2003, Recommendation 12 eventually asked that the “gatekeepers” be also made to follow both customer due diligence and record-keeping standards. Among those gatekeepers are lawyers and notaries.
However, lawyers and notaries were to be subjected to those duties only when they engage in a limited number of activities. Those are (a) buying and selling real estate; (b) managing of client money, securities and other assets; (c) management of bank, savings or securities accounts; (d) organization of contributions for the creation, operation or management of companies; and (e) creation, operation or management of legal persons or arrangements, and buying and selling of business entities. It is suggested by the FATF that lawyers and notaries be covered only when they prepare for or carry out transactions for their client concerning the aforesaid activities.
It is clear, however, that the FATF, in making these recommendations, had no intention of suggesting the violation of professional legal confidentiality. The last paragraph of Recommendation No. 16 said:
“Lawyers, notaries, … are not required to report their suspicions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.”
Just precisely when that situation occurs is difficult for the FATF to determine. For that reason, FATF stated, in its Interpretative Note to Recommendation 16 that “It is for each jurisdiction to determine the matters that would fall under legal professional privilege or professional secrecy. This would normally cover information lawyers, notaries or other independent legal professionals receive from or obtain through one of their clients: (a) in the course of ascertaining the legal position of their client, or (b) in performing their task of defending or representing that client in, or concerning judicial, administrative, arbitration or mediation proceedings.”
fact, it seems that the FATF, knowing its own limitations, is not as
specific as Aquino’s suggestion that the suspicious transaction report
be made to the AMLC itself. The
second paragraph of the same interpretative note says that “Countries
may allow lawyers, notaries…to send their STR to their appropriate
self-regulatory organizations, provided that there are appropriate forms
of co-operation between these organizations and the FIU.”
In order words, the FATF appears
open to the idea that the suspicious transaction report of lawyers and
notaries, in the few cases when the various countries consider them
proper, be submitted to an entity other than the AMLC. Like for example, a
designated office at the Supreme Court, provided proper forms of
co-operation exists between the Supreme Court and the AMLC.
told, therefore, all that Aquino did in his letter was to inform the
Supreme Court that, in a sense, the ball is in its hands on how, if it is
so minded, it ought to demonstrate that it is not carving out the legal
profession from the universe of gatekeepers that are being conscripted by
the FATF in the war against money-laundering and terrorist financing.
submit, if I may, that there is very little else that the Supreme Court
need to do to show that it is not coddling lawyers allowing themselves to
be used as channels by money launderers. The Lawyer’s Code of
Professional Responsibility, promulgated by the Supreme Court on June 21,
1988, contains sufficient provisions that proscribe such an activity. And
cases abound to prove that the Supreme Court does not tolerate breaches of
1.01, for instance, says that a lawyer shall not counsel or abet
activities aimed at defiance of the law….
In another section, while Rule 15.02 binds a lawyer to the rule on
privilege communication in respect of matters disclosed to him by a
prospective client, Rule 15.07 imposes on him the obligation to impress
upon his client compliance with the laws….
21 in the said Code asks a lawyer to preserve the confidences and secrets
of his client and Rule 21.01 permits disclosure of such confidences and
secrets of his clients when required by law. At the moment, the Anti-Money
Laundering Law does not consider lawyers as “covered institutions” and
thus does not require lawyers to do so.
in the public interest that persons feel safe with their secrets when
consulting their lawyers. Otherwise, the person who needs legal advice may, by fear, be
motivated to not fully disclose relevant facts. When that happens, he is in jeopardy of receiving inadequate
legal advice. For this
reason, the Revised Penal Code, in Art. 209, specifically dealing with
attorneys-at-law and solicitors, make it a crime to reveal any of the
secrets of his client learned by him in his professional capacity.
Finally, the Supreme Court’s imposing the obligation on lawyers to report suspicious transactions, learned by them in their professional capacity, would inflict an obligation to disclose to the AMLC without the corresponding immunity granted by Section 9(c) of R.A. No. 9160 to “covered institutions” complying with the duty to report. Lawyers, to date, are not “covered institutions.” To give them duties to act like one without giving them the necessary protection when so doing is grossly unfair.