Good practice with regard to the duty of vigilance

Pursuant to the AML-FT regulations, a lawyer has the same obligations of vigilance and declaration of suspicion whether or not he takes charge of the movements of funds triggered for the completion of a transaction to which he provides his assistance.

Refraining from taking charge of the financial flows concerning the operations to which he contributes does not reduce his risk of being manipulated for money laundering purposes.

On the contrary, by personally ensuring these financial flows, the lawyer verifies their reality and their consistency with the legal transaction in which he participates, which is the result of a good practice and a good exercise of his duty of vigilance.

In particular, when a pecuniary settlement is discharged in a deed drafted by a lawyer, the fact that it is carried out through him represents for him the best way to ensure its effectiveness and its consistency with the deed.

A significant reduction of the risk

However, the handling by legal professionals of funds belonging to their clients is considered by the “guidance for a risk-based approach” published by the FATF as carrying increased risks.

These guidelines identify, in the first place, the risk for a lawyer of being manipulated by being solicited for an apparently regular legal transaction, actually serving as a means for a fraudulent financial flow.

The FATF then deplores a lack of information sharing between legal professionals and the banks with which these professionals deposit their clients' funds in most countries, because of the professional secrecy to which lawyers are bound.
 
The compulsory intervention of the CARPA when a lawyer receives funds on behalf of his clients precisely prevents and reduces this risk.
 
By means of the controls that it carries out using the risk-based approach and with the means of analysing operations at its disposal, the CARPA will decipher, by dialoguing with the lawyer, the financial flow incidental to the legal transaction in which he participates and verify whether its compliance is ensured.
 
If the professional secrecy to which the lawyer is strictly bound prevents him from providing a bank with the information contained in his file, the lawyer cannot, on the other hand, oppose this secrecy to the CARPA, which carries out its controls under the authority of the President of the Bar Association. This is what ensures the effectiveness of the system while guaranteeing respect for the professional secrecy owed by lawyers to their clients.
 
If the CARPA detects a risk of irregularity, it triggers the necessary alerts and encourages the lawyer to react himself pursuant to his anti-money laundering obligations. 
 
For its part, the CARPA itself makes the declaration of suspicion, if the conditions are met, for which it is responsible in its capacity of subjected party (see below).
 
The intensity of the risk attached to the handling of funds carried out by the lawyer on behalf of his clients is thus very greatly reduced because the CARPA intervenes precisely to control this risk and allows, thanks to its controls and the means that it deploys to achieve them, to secure the handling of funds.

A system integrated into the Monetary and Financial Code, implementing the recommendations of the FATF

The CARPA carries out its controls in accordance with the risk-based approach method recommended by the FATF.

Since the Order no 2020-115 of February 12, 2020 strengthening the mechanism for the fight against money laundering and the financing of terrorism (AML-FT), the CARPA is itself subject to the vigilance and reporting obligations stipulated by the Monetary and Financial Code (MFC) in AML-FT matters.
 
In the event that CARPA is required to make a declaration of suspicion, it must, like the lawyers (cf. ECHR, 5th section, Michaud v/ France, December 6, 2012) send it only and directly to the President of the Bar Association, who will only forward it to TRACFIN after having verified its legality (and not the advisability).

Lastly, the bank traceability of all transactions going through the CARPA has been guaranteed since 2016 by the existence of a specific communication right of TRACFIN with the CARPA (Article L 561-25-1 MFC). In its successive annual activity reports, TRACFIN has repeatedly praised the efficiency of this communication right.

A supervised supervisor

In the event that, through the controls that it carries out, the CARPA identifies a fraudulent transaction involving a lawyer, the matter is referred to the professional authority under whose responsibility it is placed, which takes over from a deontological and disciplinary point of view which thus participates in the self-regulation of the profession.

The CARPA thus constitutes for the Bar Association under the responsibility of which it is placed a key body dedicated to the control and regulation of the handling of funds carried out by lawyers and a key element of the system for the fight against money laundering of the legal profession and of the self-regulation ensured by the Bar Associations.

Furthermore, it is itself double-checked as to the effective implementation of its supervision obligations :

  • by a CARPA Control Commission whose mission is to periodically control all the CARPAs, and which annually draws up an activity report sent to the Keeper of the Seals, Minister of Justice; this commission constitutes the supervisory authority of the CARPAs with regard to their AML-FT obligations (Article L 561-36 MFC).
  • by an auditor responsible for a specific mission in the matter, whose annual report is sent to the Public Prosecutor at the Court of Appeal in whose jurisdiction the registered office of the CARPA is established and to the CARPA Control Commission.

The controls of the CARPA Control Commission can also be carried out at the request of the Public Prosecutor.
 
The commission is a jurisdictional body, having the power to compel the CARPAs to take any measures necessary to comply with their obligations.