Client Due Diligence - Refined rules for Attorneys
On June 26, 2017 the Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing came into effect introducing many substantial changes for attorneys regarding their client reporting obligations.
Attorneys are still required to comply with their client due diligence and reporting obligations as long as they manage client money or asset as a deposit, or are involved in the preparation and implementation of the following legal transactions:
- Transfer of shares in a company or in any other business entity, as well as transfer of real properties. Another important change is that the new act refers to transfer of ownership which means that swap transactions and gift agreements also require proper customer due diligence and reporting obligation.
- Foundation, operation, and termination of a company or any other business entity.
- Trust funds or unilateral statements on the establishment of a trust.
- Transfer of movables, in particular of funds and financial instruments without consideration.
It is another change compared to the former regulation that there is no exemption from customer due diligence in the above cases.
It is an exception and the attorneys have no reporting obligation or they can refuse the request of a financial information unit, if
- the data, fact or circumstance triggering the reporting obligation become known in connection with providing the defence in criminal proceedings or legal representation before a court, other than the court of company registration, during any stage of such defence or representation or at any time thereafter, or
- while providing legal advice relating to the questions of representation, defence or to the opening of a proceeding.
The reporting obligation and the fulfilment of the request of the financial informational unit cannot be considered as the violation of the attorneys’ confidentiality obligation.
For further information do not hesitate to contact our experts at Ecovis Hungary Legal.