Lawyers fight bill requiring them to report suspicious acts by clients


Lawyers are pushing back against anti-money laundering legislation that would require them to report suspicious customer transactions, as banks must already do.

U.S. House lawmakers led by Tom Malinowski (DN.J.) and Maxine Waters (D-California) spearheaded the provision of that body’s version of the bill authorizing defense. The requirement would also apply to accountants, payment service providers and trust companies.

Opponents fear the plan will disrupt attorney-client privilege and allow the Treasury Department to conduct random audits. “The audit power is really quite broad and unconstrained,” Covington & Burling partner Nikhil Gore said in an interview.

The legislation, prompted in part by Pandora’s Papers last year, aims to close what supporters see as loopholes in bank secrecy law that allow oligarchs such as those allied to Vladimir Putin to take advantage of US entities to launder money.

Embracing the language would prevent kleptocrats from being able to “use American law and accounting firms and trust companies to house their ill-gotten wealth,” Malinowski said in a June post. statement.

In July, the House, with broad bipartisan support, approved the annual defense bill containing the anti-money laundering language. The previous month’s House Armed Services Committee inserted the provision into the bill.

The House is set for a showdown later this year with the Senate. The Senate Armed Services Committee did not include anti-money laundering language in its version of the bill that the panel approved in June.

The full Senate has yet to act on the defense legislation. Sen. Sheldon Whitehouse (DR.I.) said he supports the anti-money laundering proposal and plans to introduce this.

Pandora’s Papers

The Pandora Papers investigation in October by the International Consortium of Investigative Journalists claims that the law firm Baker McKenzie has helped multinational corporations and wealthy individuals avoid tax through shell companies and trusts.

Malinowski and a bipartisan group of five colleagues introduced the Enablers Act, on which the language of the defense bill is based, four days after the allegations against the company were published.

A company spokeswoman referred a reporter to a statement That said, “Baker McKenzie performs a comprehensive anti-money laundering and sanctions compliance and background check on all potential clients” as part of its risk management protocols.

ABA Concerns

The American Bar Association said the legislation would regulate services provided by law firms, such as forming trusts and registering companies, and interfere with attorney-client relationships.

“Attorney-client privilege and an attorney’s ethical duty of confidentiality are fundamental legal principles,” ABA President Reginald Turner said in July 5 letters to Accommodation and Senate leaders.

The ABA has been joined by other relevant industries in lobbying against the Enablers Act, according to Senate lobbying registration forms filed in July, including major cryptocurrency exchange Coinbase. As crypto companies have grown, federal agencies have increasingly target for money laundering activities.

The latest version of amendment to the House Defense Bill lists what the sponsors consider to be examples of lawyers enabling unlawful acts. These include helping authoritarian and autocratic foreign leaders such as Teodoro Obiang, vice president of Equatorial Guinea and son of the country’s president, who embezzled millions of dollars used to buy luxury assets in the United States. United.

‘Dirty money’

The timing of the House proposal is perfect, given the Biden administration accent on reducing money laundering in the United States, said Scott Greytak, advocacy director for Transparency International US.

Greytak quotes Treasury Secretary Janet Yellen as saying that the United States could be the number one place in the world to hide dirty money. “That has to change,” he said.


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