THE LAW IS A BUSYBODY: MONEY LAUNDERING ACT 2022 VIS-A-VIS DUTY OF DISCLOSURE & LIFTING OF ATTORNEY-CLIENT PRIVILEGE
The recent Money Laundering Act [hereinafter referred to as “MLA”] was enacted in May 2022 to repeal the previous Act of 2011. This latest law like its predecessor is to ensure transparency and disclosure by shining the torchlight on financial transactions, combat money laundering and other related crimes. Penalties as usual, have been prescribed to act as deterrent for anyone, whether natural or corporate, who flouts these provisions.
The Law
Section 2(1) provides that no person or body corporate shall except through a financial institution, make or accept a cash transaction exceeding the sum of N5 Million Naira or its equivalent [in the case of an individual] or N10 Million Naira [in the case of a body corporate].
Section 3(1) imposes a duty to report in writing, a transfer to or from a foreign nation, funds or securities by any person including a money service business, of any sum exceeding $10,000, to the Special Control Unit against Money Laundering [hereinafter referred to as “SCUML”], a unit under the Economic and Financial Crimes Commission, Central Bank of Nigeria and Securities and Exchange Commission, within one day from the date of the transaction.
Section 4 (1) – (12) creates a responsibility on financial institutions and designated non-financial business and profession [hereinafter referred to as “DNBP”] to identify the identities of customers, take reasonable measures to verify anyone acting on their behalf, carry out due diligence while establishing business relationships and transactions, scrutinize transactions, gather sufficient information about customer and their business, etc.
Section 6 (1) says that financial institutions and DNBPs whose profession involves cash transactions shall in the case of a new business, before its commencement and an existing business, within 3 months after the enactment of the Act, submit to the SCUML, a declaration of its activities.
Section 7 also imposes a duty to report any suspicious transaction involving a frequency which is unjustifiable or unreasonable, surrounded by conditions of unusual or unjustified complexity, appears to have no economic justification or lawful objective, is inconsistent with the known transaction pattern of the account or business relationship, or is in the opinion of the financial institution or non-financial business and profession involves the proceeds of a criminal activity, unlawful act, money laundering or terrorist financing, and so on.
Section 11 (1) further goes on to say that notwithstanding anything to the contrary in any other law or regulation, a financial institution or DBNPs should report to the Nigerian Financial Intelligence Unite [hereinafter referred to as the “Unit”] in the case of a financial institution and to the SCUML in the case of a designated non-financial business and profession in writing within 7 days, any single transaction, lodgment or transfer of funds in excess of N5 Million Naira or its equivalent [in the case of an individual] or N10 Million Naira [in the case of a body corporate].
In addition, the law has gone a step further to place a burden on society; everyone has a reasonable man’s test to undergo. According to Section 20 (a) and (b), any person who:
“(a) conceals, removes from jurisdiction, transfers to nominees or otherwise retains the proceeds of an unlawful act on behalf of another person, where he knows or reasonably ought to have known or suspected that other person to be engaged in an unlawful act or has benefited from an unlawful act, or(b) knows or reasonably ought to have known or suspected that any property either in whole or in part directly or indirectly represents another person’s proceeds of an unlawful act, acquires or uses that property or takes possession of it, commits an offence under this Act and is liable on conviction to a fine of at least five times the value of the proceeds of the unlawful act or imprisonment for a term of at least four years but not more than 14 years or both.”
The implication is that no one can feign ignorance about the unlawful nature of a transaction. You are expected to exercise reasonable care when dealing with third parties and a certain level of diligence is expected of you.
The Law and Lawyers
Section 11 (4) expressly states that legal professional privilege and the invocation of client confidentiality shall not apply in connection with:
- the purchase or sale of property;
- the purchase or sale of any business;
- the managing of client money, securities or other assets;
- the opening or management of bank, savings or securities accounts;
- the creation, operation or management of trusts, companies or similar structures.
One of the basic tenets of the legal profession is confidentiality. Like Religious Priests with congregation members, and Medical Practitioners with patients, the law in jurisdictions worldwide regard the relationship of a lawyer and his client as sacred. Such relationship is built and sustained on the concept of trust. According to Rule 19, Rules of Professional Conduct 2007, a Lawyer and Client communication is privileged. Without consent from the latter, it cannot be disclosed. To do so is a disbarrable offence on the part of the lawyer. The communication between both parties is privileged and generally cannot be used in evidence. Section 192 (1), Evidence Act 2011 provides that the communication between a lawyer and client is privileged. Except with the Client’s consent, the lawyer CANNOT disclose such information. The exceptions are:
a. Where such communication is made in furtherance of a crime;
b. Any observation made by the lawyer that since his employment, the Client has committed a crime.
Client-Attorney Privilege is so sacred that in 192 (3), this privilege still exists even if the Lawyer is no longer in the employ of the client. It is important. Thus, a law compelling a lawyer to disclose the transaction of his client is invalid. Therefore, the above provisions of Section 11 (4) MLA 2022 lifting such privilege is an aberration of established rules and principles of law. The Court of Appeal held in Mekwunye v. Carnation Registrars Limited [2021] 15 NWLR Part 1798 Page 1 that even the Court CANNOT compel a lawyer to break confidentiality. Espousing the importance of the concept, Pemu J.C.A @ Pages 40, Paras C – D held:
“The Counsel-Client relationship is fraught and clothed with privilege. Privilege for communication in relation to litigation based on the oath and honour of the lawyer who is duty bound to guard his client’s secrets.”
Privilege is not for fun. It is a duty. Keeping it short yet firm, the words of Daudu, SAN in the proceedings of Nigerian Bar Association v. Moses [2016] 10 NWLR, Page 366 @ 391 Paras F – C:
“The legal practitioner must accept that every privilege comes with a huge baggage of responsibilities.”
When the Old Act was enacted in 2011, the Nigerian Bar Association filed a suit against the Central Bank of Nigeria and the Attorney General, arguing that the provisions compelling disclosure cannot and should not be applied to lawyers because of Client-Attorney privilege. The Court of Appeal in Central Bank of Nigeria v. Registered Trustees of the Nigerian Bar Association & Anor. [2021] 5 Nwlr Part 1769 Page 268 held that although the law did not expressly mention, indeed lawyers were to be exempted from the application of such rule. The National Assembly in its own wisdom then choose to repeal the existing law and enact a new one in its stead and then expressly lift the privilege lawyers enjoy, therefore it would be said to be “what the law now says”. This is a disregard for Rule of Law. The act of the National Assembly in this regard is nothing short of legislative rascality. Client-Attorney Privilege is sacred! It must not be touched. In Agetu v. Commissioner of Police [2020] 13 NWLR Part 1741 Page 245, the Court held that a lawyer CANNOT be compelled to disclose information of his client except where he is a witness and even at that the Court can only permit him to do so if deemed necessary.
The provisions of Section 20 (a) and (b), MLA 2022 in our opinion should definitely not apply to lawyers. A lawyer should not be saddled with the responsibility of investigating the source of his client’s funds or wealth. That is within the remit and responsibility of law enforcement agencies. What he is owed is the perfection of his brief; the payment of his professional fees by the said client. The Court of Appeal, Lagos Judicial Division on May 14th, 2021 dismissed the appeal filed by the Economic and Financial Crimes Commission who froze the accounts of renowned learned silk, Mike Ozekhome S.A.N on the grounds that his professional fees being paid to him by his client were unlawfully acquired. Lawyers enjoy this privilege and it must not be tampered with except in accordance with the due procedure of the law.
Conclusion
Without a shred of doubt, the MLA 2022 is anchored on transparency and disclosure, as the foundations to build the machinery for combating money laundering. The public has a sense of responsibility to be bloodhounds; to sniff around suspicious transactions and persons and then report to the relevant authorities. This would therefore keep everyone on their toes knowing fully well that lack of diligence is now penalized.
On the other side of the coin, it is our considered view that the Act can be deemed unconstitutional. Section 37, 1999 Constitution guarantees the Right to Privacy. The Act seemingly infringes on this. Except a person is subject of an investigation, or where it is extremely important, he should not be forced to disclose details of his financial dealings. Private transactions should be made private. Except if such matters are part of public records [which they are not], law enforcement agencies should not easily have access to them as they like. Court orders should be sought and obtained first.
Furthermore, the sacrosanctity and sacredness of Client-Attorney privilege must also be put into consideration. No matter how desirable it is, lawyers cannot and should not be compelled to disclose details of their Clients’ affairs. It goes against the very ethos of the legal profession. The provisions of the MLA 2022 therefore are nothing but an attack on the legal profession. Lawyers help in drafting the law. Help in interpreting the law. Help in defending the law. But this time, the law is a weapon being brandished against us. The law here in our opinion, is “unlawful”.
It is an attack on lawyers.
TEAM VERNIA
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