Guidance on LPP
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The Law Institute of Victoria has issued guidance on legal professional privilege to help lawyers navigate suspicious matter reporting under the AML/CTF Act from 1 July.
As a reporting entity, you must submit a suspicious matter report (SMR) when you form a suspicion. In general terms, suspicion means a subjective feeling that something might be true, without firm evidence. In legal terms, suspicion has been defined as “less than a reasonable belief but more than a possibility” and a state of mind that “falls short of belief”.
At the same time, lawyers must respect legal professional privilege. Certain communications, documents, and information provided by a client for the purpose of obtaining legal advice must remain confidential. This privilege belongs to the client, and only the client can waive it. However, because of tipping-off offences, you cannot ask the client whether they agree to waive privilege when filing a suspicious matter report.
This means that when you submit an SMR, you must not disclose legally privileged information.
Some information is generally not protected by legal professional privilege, such as the client’s identity, trust account records, and information about the source of funds. Privilege also does not apply where legal services are sought for criminal or fraudulent purposes. However, for this exception to apply, the lawyer must know or ought to have known that the matter was criminal or fraudulent.
This threshold is higher than the threshold for suspicion.
In practice, this creates three possible scenarios:
The matter is not suspicious – no SMR is required.
The matter appears suspicious, but there is not enough evidence to conclude it is criminal or fraudulent – you must file an SMR but exclude privileged information.
The matter is suspicious, and you know it involves criminal or fraudulent conduct – you must file an SMR, and legal privilege does not apply.
Get in touch if you have any questions or want to discuss your upcoming AML/CTF obligations.
