Anti-money laundering at law firms: when a lawyer is an obliged entity and what Law 10/2010 requires

Law 10/2010 of 28 April on the prevention of money laundering and terrorist financing includes lawyers among its obliged entities, but not in every case. For a firm with corporate, real estate or tax practice areas, knowing when those obligations are triggered is part of day-to-day compliance.

This article summarises what the law says. Its implementing regulation is Royal Decree 304/2014, whose detail is worth reviewing with the firm's compliance officer.

When a lawyer is an obliged entity

Article 2.1, letter ñ, subjects to the law lawyers, procuradores and other independent professionals when they take part in designing certain operations for clients or intervene in them. Those operations include, broadly:

• Sales of real estate or business entities.
• Management of the client's funds or accounts.
• Setting up or managing companies, corporations and trusts.

The provision closes with a broad formula: they are also subject when acting on behalf of clients in any financial or real estate operation.

What is left out: defence

Article 22 establishes that lawyers are not subject to the obligations of Articles 7.3, 18 and 21 regarding information they receive from their clients or obtain about them when determining their legal position or defending them in judicial proceedings, including advice on starting or avoiding proceedings.

The same article recalls that lawyers remain bound by professional secrecy. The border is therefore not the lawyer's specialty, but the nature of the action: structuring an operation is not the same as defending the client.

The main obligations

Identify the client

Under Article 3, anyone who wants to establish a business relationship or take part in operations must be identified, and their identity checked with reliable documents before starting the relationship or carrying out the operation. The law prohibits keeping anonymous relationships or ones under fictitious names.

Identify the beneficial owner

Article 4 requires identifying the beneficial owner. Broadly, this is the natural person on whose behalf one acts or who ultimately controls a legal person, for example with more than 25% of the capital or voting rights, or by other means of control. If no one meets that criterion, the director is considered the beneficial owner.

The law does not allow relationships with legal persons whose ownership or control structure could not be determined.

Report indications

Article 18 requires reporting to the Executive Service of the Commission operations where, after a special examination, there is an indication or certainty of a link to money laundering or terrorist financing. This includes operations with no apparent economic or professional justification. The report must be made without delay.

Do not disclose

Article 24 prohibits disclosing to the client or third parties that information has been reported to the Executive Service or that an operation is being examined. For lawyers, the law clarifies that trying to dissuade a client from engaging in illegal activity is not prohibited disclosure.

Keep the documents

Article 25 requires keeping for ten years the documentation proving compliance with the obligations. After five years from the end of the relationship or the operation, access is limited to the internal control bodies and, where applicable, those in charge of legal defence.

How to organise it at the firm

1. Classify engagements when opening each file: defence and advice on the legal position, or involvement in an operation of those listed in Article 2.1.ñ.
2. Apply identification of the client and the beneficial owner before starting on engagements that are covered.
3. Designate who is consulted about possible indications and document the special examination.
4. Keep the documentation with a system that allows it to be located during the legal period.
5. Train the team, especially associates who open files.

Prevention obligations coexist with other compliance duties that affect firms as businesses, such as the whistleblowing channel under Law 2/2023. And the handling of client funds has its own ethical rules, which we explain in the guide on client funds and a separate account. More analysis in Big law firms and lateral moves.