Lawyer and Money Laundering in Marbella

How to Avoid Money Laundering in Marbella

The legal and business community in Marbella town was recently shocked when it learned that one of its most prominent lawyers and his staff, along with three notaries, had been detained and subsequently arrested for money laundering. Like a scene from the television show NYPD, the police dramatically raided the plush offices of Del Valle Abogados.

Many locals claimed that excessive force was used, more befitting a terrorist raid, considering the nature of the allegations. The police operation and investigation has been code-named Operacion Ballena Blanca, and the authorities claim to have discovered connections between Del Valle Abogados and criminal organisations.

Who is the Client?

In the aftermath, many lawyers and business are changing their internal procedures to deal with identifying where their client’s funds come from, and seeking to know more about their clients.

Some lawyers are also concerned that they do not have the resources to make necessary background checks because they are lawyer, not police. Furthermore, as banks are required to do their own due diligence, it is generally accepted that funds must be clean if they have gone through the banking system.

Definition of money laundering?

A person commits an act of money laundering if they conceal, disguise, convert, transfer or remove criminal property, or if they enter into or become concerned in an arrangement which know or suspect facilitates (by whatever means) the acquisition, retention use or control of criminal property by or on behalf of another person. Also, if they acquire use or are in possession of criminal property, this is viewed as money laundering as well.

Property is criminal property if it constitutes a person’s benefit in whole or in part from criminal conduct, or represents such a benefit directly or indirectly, in whole or in part, and if the alleged offender knows or suspects that it constitutes or represents such a benefit.

Criminal property also includes the proceeds of tax evasion, benefits obtained through bribery and corruption, benefits obtained through the operation of a cartel, and benefits from a failure to comply with a regulatory requirement, where the failure is a criminal offence.

Regulations apply who??

Money laundering regulations apply to lawyers, accountancy practise, auditors, company formation agents, investment businesses, banks, bureaux de change and cheque encashment business, estate agents, casinos, auctioneers, tax advisors, insolvency practitioners, life insurance companies, public notaries, procurators, art galleries, and anyone dealing in goods of any description by way of business where the acceptance of cash of 8,000 euros (15,000 euros in UK) or more occurs for any single or limited series of transactions. Banks require different due diligence.


The Lawyer’s obligation.

The obligations of the above mentioned businesses are to establish and record keeping procedures, as well as internal reporting procedures. Companies must also train their employees on how to recognise and deal with suspicious transactions. Documents relating to transactions over 30,000 euros must be kept for six years.

Another important money laundering prevention procedure is called “know your Client”. Once contact with a prospective client is made, the client must produce satisfactory evidence of their identity before any business relationship or transaction takes place.

For example, a prospective client should produce their DNI, residence card, passport or another photo ID. In the UK, the requirement is certified copy of the client’s passport, a reference letter from the bank, and a utility bill showing the client’s home address.

In Spain, companies need to provide their title deed of incorporation, NIF, address and the names of the Directors.

If a Lawyer suspect money Laundering?

Finally, if a firm or individual reasonably suspects money laundering activities by a client, they are required to file a report at the Comision de Prevencion de Blanqueo de Capitales e Infracciones Monetarias. You can be fined if you have actual knowledge or suspicion of money laundering, by shutting your mind to the obvious, and deliberately refraining from making inquiries.

In conclusion, as Spain tightens up its money laundering regulations, it is likely that many business will need to change their internal and “know your Client” procedures. Meanwhile we all need to be aware that it is very important to document transactions carefully in case evidence needed in the future.