IBA to develop anti-corruption advice for lawyers in international deals

Professional conduct standards and practice guidance for lawyers advising on international commercial structures, to help them combat corruption, are to be developed through a joint project involving the International Bar Association.

Following on from the London Anti-Corruption Summit in May 2016, the IBA and the Organisation for Economic Co-operation and Development (OECD) have agreed to form a task force to develop to develop appropriate guidance that assists in the fight against corruption while ensuring that confidence in both the lawyers' role and the core principles of the legal profession are preserved.

The release earlier this year of the so-called Panama Papers highlighted that, in completing legal transactions for their clients, lawyers may knowingly or unwittingly assist clients in asset concealment or money laundering. International standards, such as the Recommendations of the Financial Action Task Force (FATF), provide a framework for conducting due diligence on customers and identifying the beneficial owner. However, countries' implementation of these standards has been variable. Since the scandal, many governments have called for greater transparency of such transactions, sometimes requiring reporting by lawyers. This new project will seek to reconcile these objectives with obligations of professional confidence.

The task force will include lawyers from common law and civil law jurisdictions, experienced in professional ethics, taxes, anti-money laundering, anti-corruption, financial services, trade and government affairs. Among the questions it will consider are:

• What is the legal profession's role in combating corruption, tax evasion, money-laundering and terrorism financing, taking into account relevant international standards, professional duties of lawyers and the role that such duties play in preserving the rule of law?
• What steps, if any, should lawyers take in the event that acts or transactions previously legal become illegal as a result of a change of law?
• What should be the result when – notwithstanding the best efforts from the law firm – the client engages in activities that are legal in one jurisdiction but illegal in another?
• What use, if any, may be made of illegally garnered information, and what liability do lawyers have for inadvertent breach of client confidentiality?
• What steps should governments take to provide transparency of such transactions while recognising legitimate attorney-client privilege and professional secrecy?

IBA President David W Rivkin commented: 'It is undeniable that lawyers must play a central role in complex offshore financial transactions. To ensure that they do not unwittingly facilitate economic crime, it is imperative that lawyers ask the right questions of their clients, vet them sufficiently, understand who are to be the ultimate beneficiaries of their client's actions, and have an understanding of sovereign laws.

"In practice, inevitably complications arise. For example, what are a law firm's obligations when conflicting sovereign laws apply in cross-border transactions? Recent events have shown that existing international and professional standards may not provide sufficiently clear guidance to lawyers who handle such transactions. Recent actions also present the danger that in their anti-corruption activities, governments may ignore the need for lawyers to advise their clients in confidence.

"For this reason the IBA has partnered with the foremost inter-governmental organisation analysing and promoting economic policies, the OECD, to create appropriate standards while, at the same time, respect the fundamental rules applicable to the profession that are a key element of the rule of law. Each organisation will bring its relevant expertise to the project."

Nicola Bonucci, OECD director for legal affairs, added: "Mere formal respect of the law is a necessary but not always sufficient condition, and experts from the OECD and from the IBA will confront their point of view and work together in order to ensure that these professional standards meet the expectations of the various stakeholders. This pioneering work will not substitute or conflict with existing international and national requirements and will complement other ongoing OECD work on the role of tax intermediaries."