FINANCIAL ACTION TASK FORCE (FATF): The ABA provided the FATF with its preliminary reaction May 6 to the task force’s Draft Report on Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals (Typologies Draft). The FATF is an international inter-governmental body established to develop ways to combat money laundering and terrorist financing. In a letter to the FATF, Kevin Shepherd, chair of the ABA Task Force on Gatekeeper Regulation and the Profession, offered specific suggestions for improving the FATF’s “typologies,” hypothetical situations highlighting unwitting involvement of lawyers in these harmful activities. According to Shepherd, it is “critically important that the typologies be practical, meaningful and helpful in assisting legal professionals to detect money laundering and terrorist financing in their client intake and, later, in their representation of clients on an ongoing basis.” However, he expressed the ABA’s concerns that the Typologies Draft falls short of this goal by including some typologies that invariably involve complicit criminal activity by legal professionals and that address factual patterns that are not typical. He recommended that the Typologies Draft be trimmed down and focused more directly on the types of typologies that legal professionals may encounter. He added that the ABA would like to learn more about the FATF’s favorable conclusions concerning the contributions that suspicious transaction reports have made to law enforcement and called for a greater dialogue on the role of attorney-client confidentiality, which varies among countries. Shepherd also recommended that the FATF include information in the Typologies Draft about the ABA-issued “Voluntary Good Practices Guidance for Lawyers to Detect and Combat Money Laundering and Terrorist Financing,” a comprehensive resource available to all attorneys to help avoid money laundering and terrorist financing risks. After the FATF announced at a May 14 meeting in London that it would accept final comments from the private sector only until May 17, Shepherd urged the task force to reconsider its unusually swift timetable. He emphasized that the ABA has not had sufficient time to produce final recommendations and expressed the association’s concerns that if adoption of the report is rushed, it will do little to educate the vast majority of lawyers who could benefit from a practical paper.
U.S. PATENT AND TRADEMARK OFFICE (USPTO): The ABA expressed serious concerns this month regarding sequestration of almost nine percent of all fees collected by the USPTO after March 1 of this year. According to a letter sent to the Office of Management and Budget May 20 by ABA Governmental Affairs Director Thomas M. Susman, the announced sequestration “is likely to seriously impair the delivery of ongoing USPTO services and to substantially slow if not shut down implementation of improvements provided for in the America Invents Act (AIA).” That act, signed into law in 2011, was the most far-reaching modernization of U.S. patent laws and practice in more than half a century, and Congress had provided additional funding to implement those improvements. Susman pointed out that the USPTO is funded entirely by user fees paid by its customers, with no taxpayer funds involved, but in the past the office was crippled by the withholding of substantial portion of the collected user fees. In recent years, including the current fiscal year, Congress has appropriated the full amount of user fees collected. Susman also pointed out that it appears that there is no specific provision to enable the USPTO to recapture the user fees that are sequestered. Under the AIA and annual appropriations acts, fees in excess of the amount appropriated for a fiscal year are directed to a reserve fund that is later made available through reprogramming. However, the sequestered funds are not in excess of the current appropriation but are taken from the appropriation, and thus the recapture provisions do not apply. Susman explained that, based on past experience with user fee diversion and USPTO’s evaluation of the requirements for complying with sequestration, the reduction in funding will necessitate suspension of hiring of personnel, including patent examiners and administrative law judges needed to implement new programs and improvements mandated by Congress in the AIA as well as drastic reductions in funding for training, travel and improvements in information technology. These curtailments, he said, will result in system-wide reductions in the timeliness and quality of USPTO services, which are “essential to the ability of the office to serve our creative community effectively and to support the United States in the increasingly competitive world economy, where intellectual property is our leading asset.”