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HMRC internal manual

Money Laundering Regulations: Compliance

Compliance visit tests: monitoring suspicious activity reports: Legal privilege for Accountancy Service Providers

Legal privilege normally applies to Lawyers but it has been extended, under certain circumstances, to protect Auditors, Accountants and Tax Advisers providing comparable services to Lawyers.

Failing to report suspicions of money laundering to SOCA is normally a criminal offence. However, Section 330(6)) POCA provides a defence to Professional Legal Advisers when the information giving rise to a suspicion comes to them in “privileged circumstances”.

This privileged was extended Feb 2006 to Auditors, Accountants and Tax Advisers who are members of a professional body which meets certain professional and ethical standards.

Under section 330(10), Parliament declared that information comes to a legal professional adviser (or a relevant professional adviser, as amended) in privileged circumstances if it is communicated or given to them -

(a) by (or by a representative of) a client of his in connection with the giving by the advisor of legal advice to his client,

(b) by (or by a representative of) a person seeking legal advice from the advisor, or

(c) by a person in connection with legal proceedings or contemplated legal proceedings.

In practice identifying the limits of legal privilege for ASPs is extremely difficult and this has still to be tested in law. This means that Compliance Officers must not under any circumstances challenge any legal privilege defence that is given for not submitting SARS. They should however ask and record the specific circumstances why the ASP believes that legal privilege applies. If this is encountered a report should be made immediately to the MLR Policy Team.