Rule 67 Rules of Professional Conduct for Legal Practitioners

Rule 67 of the Rules of Professional Conduct for Legal Practitioners (RPC) 2023 is about Risk management and mitigation. It is under Part III (Risk Based Approach and Client Due Diligence) of Chapter 2 (Guidelines and Rules on Anti-money Laundering and Combating Financing of Terrorism for Legal Practitioners) of the Rules. It provides as follows:

(1) Due to the nature of the kind of services legal practitioners render to society, there are certain vulnerabilities faced in the practice of the legal profession, Adopting a risk-based approach ensures that legal practitioners or
law firms quickly identify such circumstances and then adopt practices that will mitigate these vulnerabilities by conducting initial CDD and ongoing monitoring, as well as a range of other internal policies, training and systems put in place so as not to be unwittingly involved or facilitate the crime of money laundering or terrorism financing.

(2) Depending on the services provided, a legal practitioner shall have policies and procedures in place to identify and verify the identities of clients by using reliable, independent source documents, data, or information and where appropriate, to obtain evidence of the veracity of such identities.

(3) The following are identified as instructions from clients that may likely expose legal practitioners to AML and TF risks—
(a) acting on instructions to act as a settlor ;
(b) instructions to act as a nominee ;
(c) instructions to act as a protector ;
(d) instructions to prepare a trust, where the legal practitional is not acting as trustee ;
(e) instructions to act as a trustee ;
(f) instructions to act as named beneficiaries or class of beneficiaries ; and
(g) instructions to act as any other natural person exercising effective control over the trust.

(4) Legal practitioners or law firms shall identify and assess the ML and TF risks associated with their clients or categories of clients, and certain types of work, and this will allow legal practitioners or law firms to determine and implement reasonable and proportionate measures and controls to mitigate such risks.

(5) The risks and appropriate measures will depend on the nature of the legal practitioner or law firm’s role and involvement, and circumstances may vary considerably between practitioners who represent clients directly and those who are engaged for distinct purposes.

(6) Legal practitioners or law firms shall implement appropriate measures and controls to mitigate the potential ML and TF risks for those clients that, because of the internal RAG, are determined to be higher risk, and these measures shall be tailored to the specific risks faced, both to ensure the risk is adequately addressed and to assist in the appropriate allocation of finite resources for CDD.

(7) Sole practitioners, legal practitioners and appropriate staff in law firms shall be trained to identify and detect relevant changes in client activity by reference to risk-based criteria.

(8) The measures and controls that may be adopted to achieve the provision of paragraph (7) include—
(a) general training on ML and TF methods and risks relevant to legal profession ;
(b) targeted training for increased risk awareness by the legal practitioners providing specified activities to higher risk clients or to legal practitioners undertaking higher risk work ;
(c) training on when and how to ascertain a high-risk client and potential risk, evidence, and record of source of wealth and beneficial ownership information (if required) ;

(d) periodic review of the services offered by the legal practitioner or law firm, and the periodic evaluation of the AML and CFT framework applicable to the law firm or legal practitioner and the law firm’s own AML and CFT
procedures, to determine whether the ML and TF risk has increased, and adequate controls put in place to mitigate those increased risks ; and

(e) reviewing client relationships on a periodic basis to determine whether the ML and TF risk has increased.