Legal regulation of financial monitoring in advocacy

Abstract

It is established that according to the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Financing Terrorism and Financing the Proliferation of Weapons of Mass Destruction" notaries, attorneys, law firms and associations, auditors, audit firms, subordinate firms, audit firms provide accounting services, entities providing legal services (other than persons providing employment in the framework of employment relationships) are specially designated entities of the primary financial monitoring.

Appearance of advocates among the entities of primary financial monitoring is obviously conditioned by the need to implement in national law international standards in the field of preventing and combating the legalization (laundering) of proceeds of crime, or the financing of terrorism and the financing of proliferation.

It should be noted that Part 1 of Art. 8 of the mentioned Law outlines specific cases where the lawyer's representatives are obliged to perform the duties of the subject of the initial financial monitoring, namely, when they are involved in a financial transaction for their client in relation to: purchase and sale of real estate; management of client's assets; managing a bank account or a securities account; raising funds for the formation of legal entities, ensuring their activities and managing them; the formation of legal entities, the provision of their activities (including auditing) or the management thereof, as well as the sale and purchase of legal entities (corporate rights).

Scientific literature notes that attorneys, law firms, and associations may not notify a specially authorized body of their suspicion when the relevant information has become known to them in a matter of professional secrecy, or is privileged to maintain professional secrecy, as well as cases where they perform their duties to protect the client, represent their interests in the judiciary and in pre-litigation matters.

In the case of such transactions, the entity shall be registered with the State Financial Monitoring Service of Ukraine no later than the day of the contractual relations with clients on such transactions. The subject shall notify the state regulator of the operation performed by the state regulator not later than the next business day from the day of registration of such operations. Prior to the appointment of the responsible person for financial monitoring, the responsibility lies with the head of the law firm and the law firm. After the appointment of the responsible person, there is an obligation to inform the State Financial Monitoring Service of Ukraine within three days.

The conclusions state that the current Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Financing Terrorism and Financing the Proliferation of Weapons of Mass Destruction” allows attorneys, law firms and associations not to report on the relevant operations if such operations fall under information under a lawyer's secret. In turn, this opportunity is not provided for other entities providing legal services (including law firms).