Presentation

When assisting in executing a transaction, a lawyer has the same obligations of vigilance and declaration of suspicion whether or not he takes charge of the movements of funds related to its completion.

A lawyer who refrains 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. This good practice fulfils his duty of vigilance.

The CARPA is subject to the vigilance and reporting obligations stipulated by the Monetary and Financial Code (CMF) in AML-FT matters and targeted financial sanctions.

The CARPA exercises its controls according to the risk-based approach recommended by the FATF.
 
In the event that CARPA should make a declaration of suspicion, it must, like lawyers, send it only to the President of the Bar Association, who will forward it to Tracfin after having verified its legality (and not the advisability (cf. ECHR, 5th Section, Michaud versus France, December 6, 2012).

The bank traceability of all transactions going through the CARPA is ensured by the existence of a specific communication right of Tracfin with the CARPA (Article L 561-25-1 of the Monetary and Financial Code). In its annual activity reports, Tracfin has repeatedly praised the effectiveness of this communication right.

If, in the framework of its controls, the CARPA identifies a fraudulent transaction involving a lawyer, the matter is referred to the professional authority which takes over from an ethical and disciplinary point of view. This is part of 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, the CARPA is itself doubly supervised in the framework of the effective implementation of its obligations:

• Periodically, by a CARPA Control Commission 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 of the Monetary and Financial Code).
   
• Annually, 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 Control Commission of the CARPAs has the power to force the CARPAs to take any measures necessary to comply with their obligations.

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

These guidelines identify the following dual difficulty:

• On the one hand, there is the risk of a lawyer being instrumentalised by being solicited for an apparently regular legal operation, which in reality serves as a support for a fraudulent financial flow.
   
• On the other hand, there is a lack of information sharing between lawyers and the banks with which they deposit their clients' funds in most countries, due to the professional secrecy that lawyers are required to maintain with banks.

As soon as a lawyer receives funds on behalf of his clients, the compulsory intervention of the CARPA makes it possible to prevent and reduce this risk.

The CARPA carries out its controls using the risk-based approach and its transaction analysis resources. In dialogue with the lawyer, it analyses the financial flow ancillary to the legal transaction in which the lawyer is involved and checks its compliance.

While the professional secrecy to which lawyers are strictly bound prohibits them from providing a bank with the information contained in their files, they cannot invoke this secrecy against the CARPA, which carries out its checks under the authority of the President of the Bar. 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 identifies a risk, it triggers the necessary alerts and encourages the lawyer to react himself in application of his anti-money laundering obligations.

For its part, if the conditions are met, the CARPA makes the suspicious transaction report, for which it is responsible in its capacity as a reporting entity (see above).

The intensity of the risk attached to the handling of funds by lawyers on behalf of their clients is thus greatly reduced because the CARPA intervenes precisely to control this risk. Its controls and the means it uses to carry them out secure the handling of funds.

In this respect, the FATF assessment report on France (May 2022) notes that "the fact that CARPAs have been subject to AML/FT obligations since 2020 has made it possible to strengthen identification measures and mitigate the most significant risks for the profession" (paragraph 138, p. 54).