Legal Eye View: Disclosing Suspicion – When Does Privilege Intervene?

The duty upon regulated persons to report suspicions of money laundering to the authorities overrides the duty of confidentiality to the client. That much is well established and understood. But is some confidential material in a privileged category, such that the duty of disclosure is trumped by that overriding privilege?

The answer is yes, but only in the narrow context of communications with lawyers.  No criminal offence is committed by a lawyer failing to disclose suspicion-generating material obtained in circumstances of legal privilege. Only lawyers, among the regulated professions, can rely on legal privilege to decline to disclose material that otherwise would be disclosable.

Legal privilege is generally divided into two types: litigation and advice privilege. Litigation privilege is easily understood – it covers communications between client and lawyer relating to current or contemplated litigation.

Legal advice privilege is harder to pin down. There must be a legal context to the communication.  It covers legal advice given, and instructions given with a view to receiving such advice. It does not have to be advice about the law; it can for example be advice as to how to present a case to a regulator, which relies upon the professional skills of a lawyer.

However, it does not follow that every document passing between a lawyer and his client is automatically privileged. Documents that record transactions, as opposed to communications between client and lawyer, will generally not be privileged (eg completion statements or statements of account).

Problems may arise where a suspicion is generated partly as a result of privileged information and partly as a result of information that is not privileged. In such cases legal advice should probably be sought. The safer course may well be to disclose the non-privileged information in a SAR, even if that results in a disclosure which it is difficult for the police to understand or act upon because of its partial nature.

As for non-lawyers, beware – privilege is a very tricky area. If you are even thinking about withholding disclosure of suspicion-generating material on legal privilege grounds, you are likely to be wrong. Get your own independent legal advice to be safe. 

William Redgrave is a senior associate at BakerPlatt. William is an English barrister with extensive experience of financial crime and regulatory work.  As a Senior Associate at BakerPlatt his work focuses on financial disputes, including civil and criminal fraud, and financial regulatory work.

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