•The proceeds of crime and Anti Money Laundering Amendment Bill which was assented by the President on January 3 requires lawyers to keep cash records of transactions that are beyond Sh1 million.
•Through lawyer Omwanza Ombati, Kabata said advocates face the risk of being found to have breached the provisions of the impugned act should they resist divulging the client’s details.
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Lawyers have received a reprieve after the High Court stopped the implementation of the law that requires them to report any illegal dealings by their clients to the state.
Justice James Makau on Wednesday barred the state from implementing the act that requires advocates to report clients’ illegal dealings.
“Pending inter partes hearing, a conservatory order is hereby issued stopping any further implementation of section 2(c) and section 14 b of the proceeds of crime and Anti-Money Laundering Amendment Act 2021,” the judge ordered.
Judge Makau ruled that lawyer Mwaura Kabata had demonstrated that, he had a prima facie case with a likelihood of success and if orders are not granted, the advocates and their staff, who are said to be targeted by the referred section shall be prejudiced.
However, the court ruled that it has also been shown, the state shall not be prejudiced if the orders are granted on an interim basis.
LSK Nairobi branch and the National Assembly have been enjoined in the case.
The case will be mentioned on February 22 to confirm compliance and directions.
In this case, Kabata challenged the proposed law that requires lawyers to report their clients’ illegal transactions to the state.
The proceeds of crime and Anti-Money Laundering Amendment Bill which was assented by the President on January 3 requires lawyers to keep cash records of transactions that are beyond Sh1 million.
He said the law has made them unwilling state agents and turned law offices into archives for use by the police and prosecution.
“By operation of the provisions introduced into the Act, lawyers are impeded in their duties and their service delivery to their clients, as the provisions manifestly erode advocate-client privilege,” he said.
Kabata said impugned provisions clash with the various code of conduct obligating advocates to abide by the advocates-client privilege.
Through lawyer Omwanza Ombati, Kabata said advocates face the risk of being found to have breached the provisions of the impugned Act should they resist divulging the client’s details.
“If they abide by the impugned provisions of the POCAMLA Amendment, 2021, and in so doing, break their clients’ privilege,” reads court papers.
He says for both scenarios, there are harsh consequences to lawyers both to their private persons and their business concerns.
They have faulted the law saying it puts the financial report in the place of an agency to oversee compliance and allows it to search and seize protected privileged material from advocates, their law firms, homes and places of work.
“These provisions authorise sweeping searches of law offices which inherently risks breaching advocate-client privilege,” Kabata said.
He says the expectation of privacy in advocate-client privileged communications, is invariably high regardless of the context and nothing about the regulatory context of the Amendment to the Act or the fact that a regulatory agency undertakes the searches diminishes that expectation.
According to court papers, lawyers shall enjoy civil and penal immunity for relevant statements made in good faith in written or oral pleadings or their professional appearances before a court, tribunal or other legal or administrative authority.
“Advocate-client privilege has been recognised as a constitutional norm and breach of this principle of fundamental justice is sufficient to establish the potential deprivation of liberty that violates articles 24 and 31 of the Constitution,” he said.
Kabata says the regulations of lawyers by LSK and rules made thereunder provide for effective constitutional anti-money laundering and anti-terrorism financing regimes.
He says the challenged provisions are vague as far as they include employees at law firms as persons required to comply with reporting obligations.
“The amendment does not distinguish between non-legal employees, support staff, interns, pupils, messengers, clerks, process servers, secretaries,” reads court papers.
Kabata says if the provisions were allowed to stand, employees at law firms stand to violate their employment contracts should they disclose matters that came into knowledge during their employment notwithstanding their non-disclosure clauses in their contracts
“Legal advisors have been placed in an unacceptable conflict of interest between clients’ interests, the state interests, and their liberty interests, as the provisions have turned lawyers into agents of the state,” he said.
Edited by Kiilu Damaris