Law 83/2017 of 18 August, which entered into force on 17 September, introduced measures to combat money laundering and terrorist financing into the Portuguese legal system. Two of the most significant changes introduced by this law concern the property sector and the obligations imposed on lawyers.
As far as the real estate sector is concerned, the new regime has introduced significant changes, particularly with regard to the scope of the measures provided for, which will apply to any entity that carries out real estate activities.
In this regard, it is important to note that Law 89/2017 of 21 August on the Legal Regime of the Central Registry of Beneficial Owners entered into force on 20 November, which provides for the creation of a database containing information on beneficial owners, that is, the natural person or persons who hold shares in companies subject to mandatory registration, failing which these entities will be subject to an administrative offence. As a result, when carrying out a transaction, entities engaged in real estate activities will now have access to all relevant information on the beneficial owners of the client and will be obliged to assess the existence of a risk of money laundering and terrorist financing.
What’s more, these entities will also be subject to a duty of refusal, making the conclusion of the real estate transaction subject to verification of compliance with the statutory registration requirement, and will have to report any non-compliance to the Institute of Registries and Notaries. In practice, the entities engaged in real estate activities themselves will have an important role to play in strengthening and promoting compliance with internal risk control mechanisms.
Also in line with the changes introduced in the real estate sector, it is important to mention the obligation for property purchase and sale deeds to indicate the means of payment used – cheque, cash or bank transfer – mentioning the identification numbers of the means of payment. In view of this legal requirement, the entities drawing up the deed must ensure that the payment has been made and that the amount has actually been received, in order to prevent simulated transactions. Leases involving sums in excess of € 2,500 per month are also subject to these requirements.
The above changes are intended to prevent the purchase and sale of real estate without prior knowledge of the origin and destination of the funds involved in the real estate transactions, thus facilitating their tracing. The measures introduced in this way will make transactions in this sector more transparent. All this at a time when our country is experiencing a boom in the real estate market and it is essential to guarantee control of the legality of the transactions made and legal certainty. Another innovation introduced by the new regime is the extension of the subjective scope of application to lawyers. In fact, the new law stipulates that a lawyer who intervenes in certain transactions – for example, the purchase and sale of real estate – is subject to the obligations and duties provided for therein, including the identification and reporting of situations relating to their clients that appear suspicious to them, in a clear derogation from the duty of professional secrecy.
As it is widely recognised that a lawyer’s role is essentially to defend the rights and interests of his client, this measure could affect the climate of trust that has always characterised the relationship between the client and his lawyer. For this reason, in our opinion, it is questionable whether lawyers should be subject to a systematic obligation to report their clients’ activities to the investigative and financial control authorities. In this respect, the new law constitutes an unacceptable restriction on the duty of confidentiality that should guide a lawyer’s conduct.
As both the law in question and the statute of the Bar Association have been approved by Parliament, it remains to be seen how the clear conflict between the two pieces of legislation will be resolved.