IBA and OECD Secretariat issue lawyers with principles to combat Panama Papers-style situations
In light of the ongoing scandals related to the so-called Panama/Mossack Fonseca/Paradise Papers, the International Bar Association (IBA) and the Secretariat of the Organisation for Economic Co-operation and Development (OECD) have issued eight high-level principles for the legal profession to follow as the two organisations work together to combat global corruption and foster integrity.
Outlined below, the aim of the Principles is to support legal professionals in the detection and prevention of illegal conduct in international commercial transactions.
Principle 1: Non-facilitation of illegal conduct – Through the establishment of companies, trusts and partnerships, as well as the conduct of internal investigations and the design of compliance programmes, a lawyer may be unwittingly associated with illegal conduct. A lawyer should not facilitate such conduct, and should undertake the necessary due diligence to avoid doing so inadvertently.
Principle 2: Misuse of the duty of confidence and privilege – A lawyer’s duty of confidence to a client is of fundamental importance to the legal profession, as is legal privilege. However, a lawyer should not use the confidential nature of the lawyer–client relationship to shield wrongdoers. Where there are considerable grounds to believe that the client is relying on confidentiality or privilege to hide illegal activity, a lawyer should consider ceasing to act.
Principle 3: Client due diligence – A lawyer should undertake proportionate enquiries to verify the client, determine the origin of the funds being handled and identify the ultimate beneficiary of the transaction to ensure that the conduct is legal in their jurisdiction. Particular attention should be paid to clients whose transactions or profile fall within international benchmarks for jurisdictions with increased risk of bribery, corruption and commercial crime.
Principle 4: Action where client conduct is, may be or becomes illegal – Where the client’s conduct is, may be or becomes illegal (even if it was originally legal), a lawyer should advise them on the consequences and recommend that they pursue alternative solutions. If the client persists in the conduct, the lawyer should consider ceasing to act.
Principle 5: Multijurisdictional risk – Where transactions involve multiple jurisdictions and a lawyer has reasonable grounds to question the legality of the conduct or transaction concerned in another jurisdiction, a lawyer should advise the client to obtain expert advice in that jurisdiction. A lawyer should consider ceasing to act if this advice is refused or not followed.
Principle 6: Use of illegally obtained information – A lawyer should strongly discourage a client from illegally obtaining information from private parties or public officials. To facilitate this, legal frameworks should be as consistent as possible across jurisdictions.
Principle 7: Disclosure of beneficial ownership – A lawyer should obtain and maintain up-to-date beneficial ownership information and take reasonable measures to verify its accuracy in relation to the client. Beneficial ownership information should be available to state regulators, investigators and enforcement agencies.
Principle 8: Advertising by lawyers on international commercial structures – Any advertising by lawyers on international commercial structures should be transparent, accurate and truthful. Governments, bar associations and law societies should collaborate to create regulations regarding this.
More information can be found at the following link:
https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=17f37f39-e40b-4e1f-979f-2b9d56c4ca6a
Outlined below, the aim of the Principles is to support legal professionals in the detection and prevention of illegal conduct in international commercial transactions.
Principle 1: Non-facilitation of illegal conduct – Through the establishment of companies, trusts and partnerships, as well as the conduct of internal investigations and the design of compliance programmes, a lawyer may be unwittingly associated with illegal conduct. A lawyer should not facilitate such conduct, and should undertake the necessary due diligence to avoid doing so inadvertently.
Principle 2: Misuse of the duty of confidence and privilege – A lawyer’s duty of confidence to a client is of fundamental importance to the legal profession, as is legal privilege. However, a lawyer should not use the confidential nature of the lawyer–client relationship to shield wrongdoers. Where there are considerable grounds to believe that the client is relying on confidentiality or privilege to hide illegal activity, a lawyer should consider ceasing to act.
Principle 3: Client due diligence – A lawyer should undertake proportionate enquiries to verify the client, determine the origin of the funds being handled and identify the ultimate beneficiary of the transaction to ensure that the conduct is legal in their jurisdiction. Particular attention should be paid to clients whose transactions or profile fall within international benchmarks for jurisdictions with increased risk of bribery, corruption and commercial crime.
Principle 4: Action where client conduct is, may be or becomes illegal – Where the client’s conduct is, may be or becomes illegal (even if it was originally legal), a lawyer should advise them on the consequences and recommend that they pursue alternative solutions. If the client persists in the conduct, the lawyer should consider ceasing to act.
Principle 5: Multijurisdictional risk – Where transactions involve multiple jurisdictions and a lawyer has reasonable grounds to question the legality of the conduct or transaction concerned in another jurisdiction, a lawyer should advise the client to obtain expert advice in that jurisdiction. A lawyer should consider ceasing to act if this advice is refused or not followed.
Principle 6: Use of illegally obtained information – A lawyer should strongly discourage a client from illegally obtaining information from private parties or public officials. To facilitate this, legal frameworks should be as consistent as possible across jurisdictions.
Principle 7: Disclosure of beneficial ownership – A lawyer should obtain and maintain up-to-date beneficial ownership information and take reasonable measures to verify its accuracy in relation to the client. Beneficial ownership information should be available to state regulators, investigators and enforcement agencies.
Principle 8: Advertising by lawyers on international commercial structures – Any advertising by lawyers on international commercial structures should be transparent, accurate and truthful. Governments, bar associations and law societies should collaborate to create regulations regarding this.
More information can be found at the following link:
https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=17f37f39-e40b-4e1f-979f-2b9d56c4ca6a