Balancing Risk and Responsibility: How Lawyers ‘Do' Anti-Money Laundering

This paper analyses how lawyers perceive and handle new obligations to ‘police’ clients. The context is the increasing reliance on private actors in anti-money laundering/counter terrorism financing (AML for short). Specifically, extant transnational regulation requires financial institutions and “designated non-financial businesses and professions (DNFBPs)” (FATF 2012) to continuously scrutinize clients and their transactions in order to appropriately manage possible risks of money laundering. Apart from the implications for the role of business in society, this raises concerns to do with the ability, and motivation, of professionals to take on and handle such ‘policing’. Previous studies indicate that one dilemma for practitioners is how to balance commercial interest and the public interest of crime prevention, but also that AML regulation can serve to rationalize the weeding out of less desirable clients. Due to their professional obligations, where client privilege and the rule of law are the norm, lawyers are in a more intricate position than financial services practitioners in relation to AML-obligations, we argue. Notably, the European Bar Association has argued that lawyers ought to be exempt from the requirement to provide information about, and report, to competent authorities due to their role as guardians of the rule of law in democratic society (CCBE 2011).

We pose three main questions concerning how lawyers 'do' AML and balance conflicting interests in practice: To whom are lawyers (agreeing to be) accountable? Which are the boundaries of their perceived responsibilities? And how do lawyers avoid – or take – the blame? Drawing on an on-going interview study of lawyers in the UK and France, we discuss how the identification and management of ALM risk has become established in particular practices, technologies, routines and roles. Through a paper trail law professionals rendered themselves visibly accountable and enable auditing from supervisory bodies. However, responsibility tens to be limited to what is outlined in the regulation. Thus, identifying and managing AML risks was not primarily about preventing crimes, but about being diligent enough. UK lawyers were  ‘putting up a fair and sensible fight’ (Compliance Lawyer) against money laundering, whilst knowing that intelligent criminals would likely go about their business unperturbed. French lawyers were more preoccupied with two other risks. The first, is the risk of breaking client privilege. For UK lawyers, client privilege was intertwined with business interest. For French lawyers, client privilege was (also) intertwined with professional ethics and pride, so that the stakes were higher. The second is the risk of being considered an informer to the state, a risk that was linked to the French World War II experience. Taken together, these two risks were considered more severe than the risk of AML, and, consequently, avoiding blame in relation to these other risks was higher on the agenda. In conclusion, we find two different version of how to balance responsibility and risk in relation to AML. One revolves around creating a reasonable balance between the demands of the regulator, the client and the profession. The other is to privilege the client and the profession.