Carpe pecuniam : criminal forfeiture of tainted legal fees

• Author: Abraham Hamman,Raymond Koen
• DOI: 10.17159/2225-7160/2020/v53a2
• Published date: 01 June 2020
• Date: 01 June 2020
• Pages: 19-35

Criminal forfeiture of tainted legal fees 19

Carpe Pecuniam

: Criminal forfeiture of

tainted legal fees

Abraham Hamman

BA LLB LLM LLD

Associate Professor, Department of Criminal Justice and Procedure, University of the

Wes tern Cap e

Raymo nd Koe n

LLM PhD

Associate Professor, Department of Criminal Justice and Procedure, University of the

Wes tern Cap e

SUMMARY

A person charged with money laundering has a right to legal

representation and a lawyer is entitled to defend such person. What if the

lawyer is paid with dirty money? This paper explores the legal status of

tainted f ees, to determine whether such moneys should be forfeitable and,

if so, what forfeiture means for the client’s right to legal representation and

the lawyer’s right to practise his\her profession. This is an issue of

international import and the paper considers criminal forfeiture of tainted

legal fees in South Africa, the USA and Canada. All three jurisdictions

provide for the criminalisation of tainted fees. However, South African

lawyers are most in peril both of prosecution and conviction for accepting

tainted fees and of having such fees confiscated. Whereas the USA and

Canada uphold the right of lawyers to practise their profession, South

Africa appears to negate it. The South African position requires reform.

1Introduction

Nowadays, money laundering is a prominent feature of the international

criminal justice landscape, including South Africa’s, and most states are

keen to arrest, prosecute and punish money launderers. Needless to say,

those accused of money laundering have as much right to legal

representation as do all other accused. Indeed, such accused persons

likely can afford to pay for legal representation of their choice – more so

than many accused charged with non-economic crimes – because they

have access to the proceeds of their crimes.

Of course, lawyers all over the world are entitled to defend persons

accused of money laundering and to be paid for the services rendered in

the course of such defence. If the legal fees are paid with clean money,

untainted by criminality, then there is no cause for apprehension, at least

as far as the lawyer is concerned. However, if the fees are settled with

money which derives from the criminal conduct of his\her client, then

the lawyer may be in an unenviable position. Here a number of questions

arise. Is a lawyer entitled to accept dirty money as legal fees? Is the client

How to cite: Hamman & Koen ‘Carpe Pecuniam: Criminal forfeiture of tainted legal fees’ 2020 De Jure Law

Journal 19-35

http://dx.doi.org/10.17159/2225-7160/2020/v53a2

20 2020 De Jure Law Journal

entitled to use part of his\her criminal proceeds to defray his\her legal

costs? Is the lawyer who is paid with dirty money vulnerable to criminal

prosecution? Can the state seek to confiscate such legal fees because they

are proceeds of crime?

This paper focuses on the last question and makes an attempt to

unpack its ramifications with a view to understanding the legal status of

tainted fees paid to a lawyer by a client accused of money laundering.

Should such moneys be forfeitable and, if so, what does forfeiture mean

for the client’s right to legal representation and the lawyer’s right to

practise his\her profession? This is an issue of international range, given

that money laundering schemes often cross national borders, and much

is to be learnt from the experiences of foreign jurisdictions. Against this

backdrop, the paper studies the approaches taken by South Africa, the

USA and Canada to the forfeiture of tainted legal fees.

2 The South African approach

In South Africa, economic crimes in general and money laundering in

particular are regulated primarily by the Prevention of Organised Crimes

Act 121 of 1998 (POCA) and by the Financial Intelligence Centre Act 38

of 2001 (FICA). Both these statutes criminalise the acceptance by lawyers

of fees with a criminal provenance. The criminalisation provisions of

POCA and FICA operate as a primary prohibition against a South African

lawyer receiving tainted fees for services rendered.1 The lawyer who

flouts this prohibition risks criminal prosecution and punishment.2

In addition to the threat of personal criminal liability for the lawyer

who is paid with dirty money, South African law allows for the forfeiture

of the dirty money itself. Criminal forfeiture, which is in personam and

conviction based, is possible in terms of the various sections of Chapter

5 of POCA.3 It is structured formally in terms of restraint orders and

confiscation orders. Restraint orders operate to prohibit temporarily any

transactions with the property or asset to which they pertain, in order

that said property or asset may be preserved for eventual forfeiture.

Confiscation orders concern the permanent appropriation by the state of

criminal assets held by their targets. Once confiscated, these are

deposited into the Criminal Assets Recovery Account, which is subsumed

within South Africa’s National Revenue Fund.4 The disposition of funds

1 See ss 2, 4, 5 and 6 of the Prevention of Organised Crime Act 121 of 1998

and ss 1 and 28 of the Financial Intelligence Centre Act 38 of 2001.

2 For a full discussion of this aspect see Hamman & Koen “Pecunia non olet:

Dirty money as legal fees” 2017 JACL 108-114.

3 Chapter 6 of POCA sets out a correlative civil forfeiture regime, which is in

rem and non-conviction based, and which reproduces, for the most part,

the structure of criminal forfeiture. However, it is accessory to criminal

forfeiture which, as in most countries, is the default forfeiture regime in

South Africa.

4 See s 64(a) of the Prevention of Organised Crime Act.