ENABLERS Act amendment

As you may know, the ABA Governmental Affairs Office is vigorously lobbying against harmful legislation—known as the ENABLERS Act amendment to the FY 2023 National Defense Authorization Act (NDAA), H.R. 7900 and S. 4543—that would regulate many real estate and trust lawyers and their law firms as "financial institutions" under the Bank Secrecy Act (BSA) and could require them to report a substantial amount of attorney-client privileged and other protected client information to the government. The amendment could also impose a host of other costly and intrusive BSA regulations on those lawyers and their law firms.

The ABA sent a letter to Senate leaders on October 5 urging them to oppose the ENABLERS Act amendment and to ensure it is not included in the final version of the NDAA that Congress is expected to enact this year. As the ABA letter explains, the amendment would impose a major regulatory burden on lawyers and law firms; weaken the confidential lawyer-client relationship and lawyers’ current ability to prevent money laundering and other illicit activities; and undermine the attorney-client privilege, the lawyer's ethical duty to protect client confidentiality, the right to effective assistance of counsel, and state supreme courts' authority to regulate and oversee the legal profession. We also sent an ABA Action Alert to all state and local bars several weeks ago asking them to urge their Senators to oppose the amendment.

Pasted below is a new ABA Action Alert that we would like you to send to the members of the ABA Real Property, Trust & Estate Law (RPTE) Section, many of whom would be directly affected by the ENABLERS Act. I consulted with Kevin Shepherd (copied here)--who as you know is a former Chair of RPTE, a former longtime Chair of the ABA Gatekeeper Task Force, and works closely with our office on many anti-money laundering and lawyer regulation issues—and he agrees that an Action Alert to RPTE members would be useful.

There is a real risk that if the ENABLERS Act amendment is not excluded from the final version of the NDAA, it could become law in the coming weeks, given that the NDAA is one of the few "must pass" bills that Congress is certain to enact this year with little or no debate. Senate leaders are now discussing which amendments to include in the Senate's version of the NDAA—and the full Senate is expected to begin debate on the bill and vote on amendments as soon as early next week—so time is of the essence.

ENABLERS Act Would Regulate Real Estate and Trust Lawyers Under the Bank Secrecy Act!

We need your help to persuade the Senate to reject the fast-moving ENABLERS Act amendment to the FY 2023 National Defense Authorization Act (NDAA). This harmful Senate amendment, like the similar amendment contained in the House-passed version of the NDAA, would regulate many real estate and trust lawyers and law firms under the Bank Secrecy Act (BSA) and could require them to report a substantial amount of attorney-client privileged and other protected client information to the government.

Click here to edit and send a letter asking your Senators to oppose the ENABLERS Act amendment and to not include it in the final NDAA!

The ENABLERS Act amendment, sponsored by Sen. Sheldon Whitehouse (D-RI), would change the BSA’s definition of “financial institution” to include lawyers and law firms that provide legal services to clients involving company formation, trust services, acquiring or disposing of interests in those entities, and many other specified financial activities. It would also require the Treasury Department to issue new regulations that could subject these lawyers and law firms to some or all of the BSA’s requirements for financial institutions. This could force you to submit Suspicious Activity Reports (SARs) on your clients’ financial transactions (without notifying the clients); identify and verify your clients’ accounts to the government; establish due diligence policies that could conflict with state supreme court rules; create costly and burdensome new anti-money laundering programs within your law firm; and undergo periodic or random audits to assess compliance.

The ABA sent letters to Senate leaders and all other Senators on October 5 urging them to oppose the ENABLERS Act amendment and to ensure it is not included in the final version of the NDAA that Congress is expected to enact this year. Now it’s your turn!

Please use our digital tools to contact your Senators as soon as possible and urge them to oppose the ENABLERS Act amendment to the NDAA. Explain to them that the amendment would impose a major regulatory burden on lawyers and law firms; weaken the confidential lawyer-client relationship and lawyers’ ability to prevent money laundering and other illicit activities; and undermine the attorney-client privilege and the state courts’ authority to regulate and oversee the legal profession.

Thank you,

ABA Governmental Affairs Office

This announcement first appeared on the ABA Governmental Affairs Office of the American Bar Association.