Preventive legal certainty in financial operations

This article develops the main ideas presented during that day and aims to answer a simple question, but of enormous significance: Why is the intervention of the notary still essential in the financial operations of the 21st century?

It had never been so easy to take out a mortgage, buy a home, set up a company or make a transfer of thousands of euros. In just a few minutes, economic operations can be initiated that only a few decades ago required numerous face-to-face procedures and complex document management.

Digital transformation has been an extraordinary advance for citizens, companies and financial institutions. Electronic contracting, digital identification and artificial intelligence have made economic traffic faster and more efficient. 

But they have also generated new risks.

Identity theft, document fraud, scams through social engineering, the use of intermediary companies, money laundering or increasing regulatory complexity make legal security today an element as important as the technology itself.

Paradoxically, the simpler an operation seems from a technological point of view, the greater its complexity may be from a legal point of view.

And it is precisely in this scenario that preventive legal security takes on special relevance, one of the essential principles on which the notarial function is based.

The notary does not intervene solely to authorise a public deed. Their main mission is to provide preventive legal certainty, that is, to prevent conflicts from arising.

While the courts act when the dispute already exists, the notary intervenes beforehand, ensuring that the transaction complies with the law, that those involved have sufficient capacity and legitimacy, and that they understand the legal and economic consequences of what they are going to sign.

This preventive function is especially important in financial transactions, where significant economic interests and commitments that may extend over decades often concur.

The notary does not represent the buyer, the seller, or the financial institution. Their role is different: to guarantee the legality, impartiality, and legal certainty of the transaction.

And this institutional position explains why the notarial function remains essential in an increasingly digitalised and complex economy.

Perhaps the greatest success of preventive legal certainty is precisely that it goes unnoticed. When a transaction concludes normally, we rarely think about the problems that could have arisen and never materialised. However, it is precisely there where its true value lies: in preventing conflicts before they exist and in generating the necessary trust for citizens, companies, and financial institutions to contract with confidence.

There is an idea that often goes unnoticed when we talk about legal certainty: it not only protects those involved in a specific transaction, but also contributes to the proper functioning of the entire economy.

Every time a sale, a mortgage, or a corporate transaction is formalised with the appropriate legal guarantees, the likelihood of future litigation decreases, the costs associated with conflict are reduced, and confidence in economic activity increases.

In this regard, the notarial function goes beyond the particular interest of the parties. Preventive legal certainty constitutes a genuine institutional infrastructure, as necessary for economic development as physical or technological infrastructures.

Markets need financing, investment, and innovation capacity, but they also need certainty. No economic operator is willing to assume unnecessary legal risks when making a significant investment or acquiring a long-term financial commitment.

Therefore, the intervention of the notary should not be understood as a mere formal requirement prior to the signing of a public deed. Its purpose is to reduce legal uncertainty before it can turn into a conflict.

Preventive legal certainty not only protects those involved in a sale, a mortgage or a corporate transaction. It also plays an essential role in preserving confidence in the entire economic system.

Document fraud, identity theft, concealment of the real owner or money laundering do not only harm those directly involved in a transaction. When these behaviours manage to enter the legal framework, confidence in institutions is weakened and insecurity in the markets increases.

Therefore, the role of the notary goes beyond the particular interest of the parties: it helps to ensure that the transactions entering the legal framework are carried out with authenticity, transparency and full compliance with the law.

One of the best examples of this institutional function is the prevention of money laundering.

Money laundering is often associated with large criminal organisations. However, reality shows that funds of illicit origin try to enter the legal economy through apparently ordinary operations, such as the purchase of real estate, the incorporation of companies, or certain financing operations.

The notarial profession plays an essential role in this area as an obliged party under the money laundering prevention regulations.

Its function is not to investigate crimes nor to replace the State Security Forces and Corps. Its mission is preventive: to identify risk situations, verify the identity of the parties involved, check the beneficial ownership when companies are involved, and apply the due diligence measures provided by law.

As with preventive legal certainty, the objective is not to react once the fraud has already occurred, but to make it difficult for it to materialise.

The increasing complexity of financial operations and corporate structures has made transparency an essential requirement.

Knowing who is really behind a company, identifying the beneficial owner, or verifying the legitimacy of those involved are actions that strengthen the security of legal transactions and protect all economic operators.

Perhaps the greatest success of these controls is the same as that of preventive legal certainty: many irregular operations never come to be formalised. When the system works properly, this work goes unnoticed. However, it constitutes one of the pillars on which trust in our legal and financial system is based.