The Advocate as “Gatekeeper”: What the Law Already Asks of the Pakistani Bar

On 29th April 2020 the American Bar Association issued Formal Opinion 491: a lawyer who knows that a client seeks to use his services for a crime or a fraud must inquire further or decline the brief, and “knowledge” for this purpose includes the knowledge of the lawyer who deliberately shuts his eyes; where the facts show a “high probability” of criminal purpose the duty to ask is affirmative, and a client who refuses to answer must be remonstrated with and, if candour is still withheld, abandoned. Peter D. Hardy, who reported the opinion on Money Laundering Watch on 6th May 2020, had traced the pressure behind it in a post of 1st May 2017 on the European Parliament’s examination of lawyers’ roles in the tax evasion and laundering schemes exposed by the Panama Papers; since the leak of April 2016 every bar in the world has been asked whether the advocate is a “Gatekeeper” against the launderer or his most convenient instrument.

Pakistan cannot treat that question as somebody else’s, because Mossack Fonseca was a law firm; the 11.5 million documents leaked in April 2016 were the client files of a firm whose stock in trade was the formation and administration of offshore companies; and it was upon that archive that the Honourable Supreme Court of Pakistan, in Imran Ahmed Khan Niazi v Mian Muhammad Nawaz Sharif (PLD 2017 SC 265), ordered a Joint Investigation Team on 20th April 2017 and then, by the judgment of 28th July 2017 (PLD 2017 SC 692), disqualified a sitting Prime Minister. The most consequential constitutional case of our generation was built out of a law office.

What Parliament has already enacted

Parliament has already answered the question of principle; whether the profession has noticed is less clear. By the Anti-Money Laundering (Second Amendment) Act, 2020, in field since 24th September 2020, Section 2(xii)(c) of the Anti-Money Laundering Act, 2010 (Act VII of 2010) defines a “DNFBP” to include lawyers, notaries, accountants and other legal professionals who carry out “monetary transactions” for their clients concerning real estate, legal persons and legal arrangements; client money, securities, or bank and savings accounts; or contributions for the creation or management of companies. A “DNFBP” is a “reporting entity”, and every “reporting entity” must under Section 7(1) promptly file a “Suspicious Transaction Report” with the Financial Monitoring Unit (“FMU”) whenever it knows, suspects or has reason to suspect that a transaction involves funds derived from illegal activities; it must conduct customer due diligence under Section 7A and keep records for five years under Section 7C, with sanctions under Section 7I for default; and Section 7(5) gives these duties effect notwithstanding any obligation of secrecy imposed by any other law or written document.

The regulator chosen for the advocate is the profession itself. Clause 2(iii) of Schedule-IV to the Act names the Pakistan Bar Council, constituted under the Legal Practitioners and Bar Councils Act, 1973 (Act XXXV of 1973), as the “Self-Regulatory Body” for lawyers enrolled under it or the Provincial and Islamabad Bar Councils, with the Ministry of Law and Justice above it as oversight body; the Federal Board of Revenue was given the real estate agents, the jewellers and the accountants outside ICAP and ICMAP, and notified its regulations for them by S.R.O. 924(I)/2020 on 29th September 2020. The Ministry proposed draft AML-CFT Regulations for Lawyers and other Independent Legal Professions (DNFBPs), 2021; whether the Pakistan Bar Council has ever notified final regulations or sanctioned a single defaulter is a question on which the public record is silent.

The silence in the tables

In the last quarter of 2022 the FMU received 6,373 “Suspicious Transaction Reports”; the “DNFBP” sector filed 127 of them, every one from a real estate agent and not one from a dealer in precious metals and stones (FMU, Quarterly Report, October to December 2022).

The quarter’s table records no “Suspicious Transaction Report” from any lawyer.

Very unfortunately, that silence cannot be mistaken for innocence. The Asia/Pacific Group on Money Laundering’s Mutual Evaluation Report of October 2019 scored Pakistan at thirty-nine per cent for technical compliance and three per cent for effectiveness; the country remained on the “Grey List” of the Financial Action Task Force (“FATF”) from June 2018 until 21st October 2022, and bought its exit with the amendment of more than ten laws. The banks were made to report; the profession that formed the companies in the Panama Papers filed nothing at all.

Part of the explanation is the drafting. Recommendation 22 of the FATF applies to lawyers when they “prepare for or carry out” transactions for a client; Section 2(xii)(c) captures only the lawyer who carries out a “monetary transaction”. Since the definition reaches only the advocate through whose hands the money actually moves, therefore the advocate who merely prepares the documents and structures the arrangement stands outside the Act altogether; the drafters confined the clause in this way for the reasons best known to them, and it hence needs serious reconsideration before the next Mutual Evaluation reads the difference as a gap.

Privilege is no shelter

The Bar’s standing objection is privilege, and the fear that the “Gatekeeper” duty turns the advocate into an informer for the state functionaries. The objection reads the privilege far too generously. Article 9 of the Qanun-e-Shahadat Order, 1984 (President’s Order No. 10 of 1984) protects professional communications, but it has always withheld protection from any communication made in furtherance of an illegal purpose, and from any fact observed by the advocate showing that a crime or fraud has been committed since his employment began; Article 12 shields the client’s confidences on the same footing. The crime-fraud limit is no FATF import; it has stood since Section 126 of the Evidence Act, 1872, which Article 9 re-enacts. The client who instructs his advocate to move the proceeds of crime was never within the privilege at all.

Nor is the ethic foreign to us. Rule 156 of Chapter XII of the Pakistan Legal Practitioners and Bar Councils Rules, 1976 declares that the great trust of the advocate is to be discharged “within and not without the bounds of the law”; Rule 172 forbids any service or advice involving “disloyalty to the law whose ministers advocates are”; and Rule 171 preserves the advocate’s absolute right to decline an employment. Formal Opinion 491 asks nothing of the American lawyer that these Canons have not asked of the Pakistani advocate since 1976; what the Canons lack is machinery and consequence.

The cost of pretending otherwise is on record elsewhere. In February 2024 Money Laundering Watch reported the sentencing of a former partner of a major American firm to ten years’ imprisonment for laundering 400 million US Dollars of client funds in cryptocurrency; the gate the lawyer would not keep was kept, in the end, against him. Pakistani law already protects the honest advocate from abusive prosecution: in Shahid Chaudhry v The State (Criminal Petition No.174 of 2026, decided 27th February 2026) the Honourable Supreme Court of Pakistan held the charge of money laundering derivative of a determined predicate offence; with the Apex Court policing the criminal side, the discipline asked of the “Gatekeeper” is administrative and preventive, not an enlargement of criminal liability.

What the Bar should accept, before it is imposed

In the light of the above, and keeping in view that the Legal Practitioners and Bar Councils Act, 1973 already vests the Pakistan Bar Council with disciplinary jurisdiction over every enrolled advocate, it is urgently required that, first, the Pakistan Bar Council finalise and notify the regulations drafted in 2021, with guidance separating litigation from the transactional work the Act actually reaches; secondly, that Section 2(xii)(c) be amended to cover the lawyer who prepares for a transaction as well as the one who carries it out, in line with Recommendation 22; thirdly, that the Council publish annually, as Section 6A(i) contemplates, the statistics of its registrations, inspections and sanctions, because a “Self-Regulatory Body” which regulates nothing is an argument for its own replacement; and fourthly, that the advocate’s duties under the Act be taught at enrolment.

The gate will be built in any event; the only question still open is who holds the keys. If the profession does not accept the “Gatekeeper” duty on its own terms, the Federal Board of Revenue or some newly minted authority will accept it on ours; and when the next Mutual Evaluation counts the “Suspicious Transaction Reports” filed by Pakistani lawyers, it would be well for the honour of the profession if the number were something other than zero.