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National Crime Authority wants to force lawyers to report clients who use trust accounts to deposit amounts over $10,000, and there is concern that solicitors are being used to launder money

TONY EASTLEY: Lawyers suspected of laundering money for organised crime in Australia have become the subject of a tense stand-off between the Federal Government and the nation's legal profession. The National Crime Authority wants to force lawyers to report clients who use their trust accounts to deposit amounts over $10,000 in cash. It's a move the Law Council of Australia says will make solicitors informers on their clients. But the head of the NCA, Tom Sherman, says there is growing concern in Australia and around the world that solicitors are being used to launder money, as Matt Brown reports.

MATTHEW BROWN: Banks and cash dealers are already required to report cash transactions over $10,000 to the Federal Government's Transactions Reporting and Analysis Centre. There, powerful computer analysis can detect trends in cash movements, even trace transactions through individual bank accounts. But when money goes into a solicitor's trust account, the client's name is effectively concealed. The National Crime Authority insists this is a loophole that must be closed. But the incoming President of the Law Council of Australia, Michael Phelps, says lawyers already keep the records needed to trace this cash, and he warns the measure will create a system of compelled informers in the legal profession.

MICHAEL PHELPS: These safeguards exist for the benefit of clients and the community generally. They completely underpin our whole justice system and society as we know it. Solicitors will be informing on their own clients and notifying government of issues of privacy and confidentiality, all the innocent members of the community, I think, you know, the legal profession really does have no role to play in assisting the Government in its law enforcement to that extent.

MATTHEW BROWN: From the sound of it, you seem to regard this more as an intelligence-gathering activity.

MICHAEL PHELPS: Well, I think that's right and, really, when we talk about the independence of the legal profession and, bearing in mind, that independence exists not for the benefit of the profession but the benefit of the community. I think it really does intrude and cut across that principle in a significant way and it's not appropriate for government to impose that obligation upon lawyers.

MATTHEW BROWN: Can you understand the perception that might exist in the community that your profession is opposing this simply because there are some solicitors around town who might lose some lucrative business?

MICHAEL PHELPS: I can't understand that perception at all. We're not coming from the position of protecting lawyers in all of this at all, we're coming from a position of protecting the privacy and the confidentiality of clients, which the clients seek.

MATTHEW BROWN: Michael Phelps. But the head of the National Crime Authority, Tom Sherman, says the legal profession's opposition is misplaced and he argues legal professional privilege only applies to legal advice, not to transactions.

TOM SHERMAN: Solicitors' trust accounts have a very significant turnover in cash. Solicitors move more cash in and out of their trust accounts than TABs and bookmakers.

TONY EASTLEY: Chairman of the National Crime Authority, Tom Sherman.