Monday, 9 February 2009

Bad Belgium!

Belgium lawyers, far from taking new legislation to combat Money Laundering on board, have been combative in resisting all pressure to implement new laws.

Jersey has its own legislation, but this mirrors the 3rd EU Money Laundering Directive in extending the laws and compliance to business professionals such as accountants, estate agents, lawyers etc. There is no exclusion option for lawyers on any ground if compliance demands reporting suspicious transactions or activity.

In contrast, Belgium has mounted several successful actions against lawyers giving up their rights to privileged information. The EU itself has taken action against Belgium and other non-compliant EU states, so the result at the moment is "in the pending tray".

Belgium has of course also so far resisted changes in its bank secrecy laws to allow co-operation with tax authorities of member States such as Germany. Jersey has recently signed a Tax Information Exchange Agreement with Germany. Maybe some of this should have come out in the Panorama programme?

In November 2007, the Belgian bar associations launched a second challenge to the implementation of the Second EU Money Laundering Directive. In the judgment discussed above, the European Court of Justice declined to resolve the bar associations' contention that the Program Statute obliges lawyers to work with the government, and thus breaches the right to privacy provided in article 8 of the European Convention on Human Rights.

The Belgium bar associations and lawyers were successful in preventing law enforcement authorities from compromising the relationship between lawyers and their clients. The court stated unambiguously that lawyers were subject to ethical rules that made them different from other professions.

The Court explicitly stated that in exercising the essential activity of "providing legal advice", even on matters for which the law imposed a notification duty (such as assisting the client in financial, real estate and corporate transactions), the lawyer remained bound by his or her professional secrecy duty and therefore could not disclose the information obtained on this occasion to the authorities.

According to an European Union press release of 5 June 2008 (Ref: IP/08/860), the European Commission (EC) is pursuing infringement actions against 15 member states, including Belgium, for failing to adopt and implement the Third EU Money Laundering Directive into national law by the deadline of 15 December 2007. Upon receiving the formal request, the infringing nations will have two months to provide an acceptable response or the EC may refer the issue to the European Court of Justice.

June 2008: The European Commission (EC) announced an intention to pursue infringement actions against a number of member states for failing to adopt and implement the Third EU Money Laundering Directive into national law by the deadline of 15 December 2007. The infringing nations were given two months to provide an acceptable response. In October the European Commission referred Belgium, Ireland, Spain and Sweden to the European Court of Justice for non-implementation

In October 2008, the Commission decided to refer Belgium, Ireland, Spain and Sweden to the ECJ for their continuing failure to implement the Third Directive. Rulings by the ECJ are binding on all EU Member States. Interestingly, if Belgium, Ireland, Spain and Sweden do not comply with any judgment passed down by the ECJ, the Commission has the power to refer the matter, once again to the ECJ (Article 228 of the EC Treaty). This referral will also contain a recommendation for a financial penalty to be imposed on the Member State, based on the seriousness of the infringement, the duration of the infringement and the need to ensure that the penalty itself will be a deterrent to further infringements.

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