Overview

The ABA supports all necessary and reasonable measures to combat money laundering and terrorist financing. However, the Association opposes federal legislation that would impose burdensome and intrusive gatekeeper regulations on lawyers, including bills that could subject the legal profession to key anti-money laundering compliance provisions of the Bank Secrecy Act. If adopted, these measures would undermine the traditional role of state courts in regulating lawyers, erode the attorney-client privilege and interfere with the confidential lawyer-client relationship, and impose excessive new federal regulations on lawyers engaged in the practice of law.

Status

S. 569, the “Information Transparency and Law Enforcement Assistance Act,” was introduced by Senator Carl Levin (D-MI), and cosponsors Claire McCaskill (D-MO) and Charles Grassley (R-IA), during the previous 111th Congress. A House companion bill, H.R. 6098, also was introduced in the 111th Congress by Rep. Carolyn Maloney (D-NY). Both measures closely parallel legislation that was previously introduced in the 110th Congress by Senator Levin, along with now-President Barack Obama and then-Senator Norm Coleman (R-MN). 

After S. 569 was referred to the Senate Homeland Security and Governmental Affairs Committee (HSGAC), of which both Senators Levin and McCaskill are members, the ABA sent a letter to HSGAC Chairman Joseph Lieberman (I-CT) in June 2009 outlining its concerns and objections to the legislation. Although the HSGAC Committee held several hearings on the issues of money laundering and terrorist financing, there was no further action on S. 569 or H.R. 6098 during the 111th Congress. The Department of the Treasury also proposed a substitute bill last year that would not bring lawyers under the Bank Secrecy Act; although a better option, the Treasury bill remains problematic. Therefore, the ABA sent a letter to Chairman Lieberman in January 2010 expressing its concerns and outlining suggestions and improvements for the Treasury bill.

The Treasury Department and key senators on the HSGAC Committee, including Sen. Tom Carper (D-DE), are now working on alternatives to S. 569, and Senator Levin’s staff recently indicated his intent to reintroduce a similar measure early in the 112th Congress.

Key Points

The ABA opposes gatekeeper legislation like S. 569 and H.R. 6098, the “Information Transparency and Law Enforcement Assistance Act,” and urges Congress not to enact such measures into law because:

• The legislation establishes a new class of financial institutions subject to extensive regulation under U.S. anti-money laundering law, which is likely to include lawyers.  Because the definition of “formation agents” in the legislation appears to include many lawyers engaged in the practice of law, it would impose anti-money laundering compliance requirements on the legal profession and treat lawyers as though they were banks.
• The legislation could grant the Treasury Department authority to impose onerous suspicious activity reporting (SAR) requirements on lawyers. If adopted, these SAR requirements could require lawyers to report certain confidential client information to the government, thereby eroding the attorney-client privilege, harming the lawyer-client relationship, conflicting with existing state bar ethical obligations of lawyers, and undermining traditional state court regulation of the legal profession.
• The legislation places unnecessary burdens on lawyers, their clients, businesses and states.  Under the legislation, lawyers would be subject to burdensome and intrusive gatekeeper regulations, including key anti-money laundering compliance provisions of the Bank Secrecy Act, which would harm both clients and their lawyers.  The legislation also would impose undue burdens on legitimate businesses and state authorities at a time when the U.S. financial system and the economy are under severe stress.

ABA Policy

Although the ABA supports reasonable and balanced initiatives to combat money laundering and terrorist financing, the ABA opposes any law or regulation that would compel lawyers to disclose confidential information to government officials or otherwise compromise the attorney-client privilege, the lawyer-client relationship, traditional state court regulation of lawyers, or the independence of the bar. This policy, crafted by the Task Force on Gatekeeper Regulation and the Profession, was first adopted by the ABA in 2003  and later reinforced in 2008.