BY
LAWAL FAROUQ AYOBAMI[1]
INTRODUCTION
A principle that runs deep in legal tradition is that laws are not only found in their general rules but also in their exceptions. In other words, viewing the law solely from a general standpoint, without considering its exceptions, presents a half-truth, which, in effect, becomes a falsehood. Recently, there has been a growing trend among some legal practitioners—particularly younger lawyers—to pursue success in the profession by any means necessary, even where such means are unethical or in breach of the Rules of Professional Conduct, so long as financial gain is achieved. An excerpt from the decision of the Court of Appeal in Ozekhome v. FRN has gone viral across social media platforms such as WhatsApp, X (formerly Twitter), Instagram, and Facebook. The excerpt suggests that once money is paid into a lawyer’s account as professional fees, it becomes “cleansed,” regardless of its origin. The Excerpt reads:
“Once money is paid to lawyer’s account and it is tagged fees for his professional service, then that money wears the toga of purity – I mean totally cleansed, even if the money is from the city of sin. Simply put, the money is washed, cleaned, purified and forgiven of all sin”.
This excerpt inter alia was the argument canvassed by Chief Mike Ozekhome’s counsel, which the penultimate court accepted as it ruled in their favour.
Sadly, the custodians of the law are ignorant of the law, as the verdict of the penultimate court has been given interpretation beyond proportion, taking to mean: “lawyers are immune to money laundering charges, therefore, clients who have dirty money are encouraged to transfer same to a lawyer to seek protection from the anti-graft agencies”. This interpretation is both misleading and dangerous. This implies that lawyers are immune from money laundering liability and that illicit funds can be legitimised by routing them through legal practitioners.
This paper seeks to clarify this misconception and to highlight the significance of Chapter 2 of the Rules of Professional Conduct 2023, which introduces anti-money laundering (AML) and counter-terrorism financing (CTF) obligations for legal practitioners in Nigeria.
BACKGROUND OF THE ANTI-MONEY LAUNDERING RULES IN CHAPTER 2 OF THE RPC.
The first-time legal practitioners were officially brought into the money laundering conversation was in the case of Registered Trustees of the Nigerian Bar Association v. Attorney General of the Federation & Central Bank of Nigeria[2]. The matter was instituted against AGF & CBN on the basis of the provision of section 5(1) of the Money Laundry (prohibition) Act 2011 which enacts that, “A designated non-financial institution whose business involves the one of cash transaction shall prior to any transaction involve a sum exceeding $1,000 or its equivalent, identify the customer by requiring him to fill a standard data form and present his valid means of identification. Also keep a record of all transactions under this section in chronological order, indicating each customer, surname, forenames, and address in a register numbered and forward to the ministry.” NBA, through its counsel, argued that by virtue of the Legal Practitioner’s Act and Rules of Professional Conduct, legal practitioners have an obligation not to permit any entity outside the Bar or Judiciary to control the practice of law, adding that this is what section 5 of the Money Laundering (Prohibition) Act 2011. The NBA was asking the court to declare the provision of section 5 MLA, insofar as they purport to apply to legal practitioners, invalid, null and void. Also, for an order deleting legal practitioners from the definition of Designated non-financial institutions as contained in section 25 MLA. The Court of Appeal ruled in favour of NBA, declaring the provision of section 5 MLA inapplicable to legal practitioners.
The second-time was the case of Ozekhome v FRN[3]. In this suit, Prof. Ozokhome instituted an action against the Economic and Financial Crimes Commission (EFCC) for seizure of his professional fees paid to him by the then sitting governor of Ekiti State, Mr. Ayodele Fayose, whom the EFCC was investigating in relations to Dansuki’s Arms Deal. The money paid to Ozekhome was his professional fee for representation in court for Ayodele Fayose. The court of appeal, agreeing with the lower court held that the freezing was unlawful because as at the time the sum were transferred to Ozekhome’s account the money were not encumbered. The court further inter alia held demising EFCC argument that Ozekhome ought to have given notice to them about the transfer of the money to him, that “a legal practitioner is entitled to his professional fees for the professional services and such fees cannot be rightly labelled as proceeds of crime. Further, it is not a requirement of law that a legal practitioner would go into inquiry before receiving fees from his client, to find out the source of the funds from which he would be paid”
These two cases inspired the General Council of the Bar led by Abubarkar Malami, SAN (the then Attorney General of the Federation) to amendment of the Rules of Professional Conduct (RPC) 2007. The gazetting of the RPC 2023 introduced the anti-money laundering and combating financing of terrorism for legal practitioners, as chapter 2 of the RPC.
The chapter 2 of the RPC provides the framework for anti-money laundering and combating financing of terrorism for legal practitioners in Nigeria.
EXAMINATION OF THE ANTI-MONEY LAUNDERING LAW UNDER CHAPTER 2 OF THE RPC 2023
The objective of the anti-money laundry rules for legal practitioners is to promote the adherence to the rule of law; promote the duty of confidentiality and client-lawyer privilege towards their clients, provide yardstick for the overall ethics and best practices of the profession to ensure that legal services are not being misused by criminals or for legal practitioners to be unwittingly involved in Money Laundering and Terrorism Financing; internally self-regulate members of the legal profession and where applicable, recommend legal practitioners who are in breach to appropriate disciplinary authorities in accordance with relevant provision of the Legal Practitioners Act; and adopt the risk based approach for legal practitioner to be able to identify money laundering, terrorism financing and proliferation financing situations and circumstances before they occur and thus provide ethical and professional advice to clients when it becomes necessary while providing professional services as a legal practitioner.[4] The Rules apply to every person within the meaning of the Legal Practitioners Act is a legal practitioner.[5] The Rule place an obligation of reporting and compliance is place on a legal practitioner when acting in the following capacities: Acting as a formation agent of a legal person; acting as a proxy for a director, secretary of a company, partner in a partnership or other related legal entity; providing registered office, business address for a legal entity; acting as a nominee of a shareholder; conducting a sale or purchase of real estate for clients or providing advisory services in relation to same.[6] A legal practitioner who fails to report accordingly is deemed in breach of the RPC and may be subject to the disciplinary actions as provided by the Legal Practitioners Act.[7] A legal practitioner or firm has an obligation to maintain an up-to-date record of necessary information of their clients that will aid the identification of such clients, and such shall be kept for not less than 5 years.[8] A legal practitioner must maintain a risk-based assessment mechanism that helps the firm to identify money laundering and terrorism financing. This includes training employees of the firm on this risk assessment mechanism. A legal practitioner has an obligation under the rule to conduct due diligence in relation to a transaction captured by the Rules, transactions involving politically exposed persons and persons related to them, cross-border transactions, particularly countries with high geographic risks like terrorist organisations, drug trafficking, human trafficking, and illegal gambling. In such transactions, a legal practitioner is mandated to carry out a proper risk assessment in respect of the transactions above, to find out the domicile of the clients, the location of the transaction or the source of the wealth or funds, and the purpose or use of such funds.[9] Where a legal practitioner carries out a client due diligence and discovers the transaction is suspicious, the legal practitioner has an obligation to file a suspicious transaction report (STR) to the Nigerian Bar Association Anti-money Laundering Committee (NBA-AMLC), which then forwards the same to the National Finance Intelligence Unit (NFIU).[10] The NBA_AMLC may undertake to investigate a law firm or legal practitioner solely, and thereafter forward a report to Special Control Unit against Money Laundering (SCUML).[11]
EXAMINATION OF THE VERDICT IN OZEKHOME V. FRN IN THE LIGHT OF ANTI-MONEY LAUNDERING LAW UNDER CHAPTER 2 OF THE RPC 2023
The rule that a legal practitioner has no obligation to know the source of his legal fees, as held Ozekhome’s case[12], is restricted to where a legal practitioner is only representing a client in court, his professional fee for his court representation. The above rule does not apply to other representations of a client as Chapter 2 of the RPC has provided. High-risk transactions like transactions involving politically exposed person or their affiliates, cross-border transactions and representation involving corporate entities, real estate and securities and digital assets. The general rule is created in the case of Ozekhome case[13] is the general rule, and the exception is provided in Chapter 2 of the RPC.
Although, EFCC or other anti-graft agencies cannot independently arrest and prosecute a legal practitioner due to the self-regulatory nature of the legal profession. The NBA-AMLC may investigate the defaulting legal practitioner and forward a report to the appropriate law enforcement agency or for disciplinary action under the Legal Practitioners Act.
The belief that lawyers can be used as a tool of money laundering is a position borne out of ignorance, which to the law is not an excuse.
CONCLUSION
The decision in Ozekhome v. FRN must not be misconstrued as a blanket immunity for legal practitioners against money laundering liability. Rather, it establishes a narrow principle confined to the receipt of professional fees in the course of courtroom representation. Where such funds are paid, there is no obligation on counsel to investigate the source of such money. However, the introduction of Chapter 2 of the Rules of Professional Conduct 2023 marks a significant shift in the regulatory landscape. It imposes clear and enforceable obligations on legal practitioners, particularly in transactional and advisory roles, to actively participate in the prevention of money laundering and terrorism financing. These obligations include client due diligence, risk assessment, record-keeping, and the reporting of suspicious transactions. Accordingly, the legal profession can no longer rely on traditional notions of absolute confidentiality and non-inquiry as a shield against regulatory compliance. The modern lawyer is not only an advocate but also a gatekeeper within the financial and legal system. Ultimately, the fight against money laundering and terrorism financing demands a delicate balance between preserving client privilege and ensuring that legal services are not exploited for illicit purposes. Legal practitioners must, therefore, embrace their dual responsibility—to their clients and to the integrity of the legal system—by adhering strictly to the provisions of Chapter 2 of the RPC 2023. Any contrary belief that lawyers can serve as safe havens for illicit funds is not only legally unfounded but also undermines the ethical foundation of the profession.
[1] Lawal Farouq Ayobami BSc (Mass Com), LLB (1st Class, BGS), BL| lawalofficial@gmail.com | +234 7032838173
[2] CA/A/202/2015.
[3] 2021 LPELR 54666 (CA).
[4] Rules of Professional Conduct for Legal Practitioners, 2023, Rule 55 (a) –(d).
[5] Ibid, Rule 56.
[6] Ibid, Rule 56(1)(a) – (f).
[7] Ibid, Rule 56(2).
[8] Ibid, Rule 58.
[9] Ibid, Rule 62
[10] Ibid, Rule 69(6).
[11] Ibid, Rule 59.
[12] (Supra)
[13] (Supra)
