Criminal Justice Section
Criminal Justice Magazine
Volume 17 Issue 1
ABA President Robert E. Hirshon has designated an ABA task force to analyze the broad legal implications of efforts to thwart international money laundering, and the potentially profound impact those efforts could produce on relationships between lawyers and their clients. The ABA Task Force on Gatekeeper Regulation and the Profession is chaired by Edward J. Krauland, a member of the governing council of the ABA Section of International Law and Practice.
"The task force will enable the ABA to have a meaningful role in advising federal policymakers as they examine antimoney laundering proposals," said Hirshon. "World leaders have approached preventing money laundering by looking to professionals who are perceived as the gatekeepers to financial systems, including lawyers, to report to law enforcement authorities what may be suspicious financial activities. The U.S. may also attempt to require U.S. lawyers to report suspicious client activity by imposing criminal sanctions for failure to comply with regulations. In addition to dealing with the very serious and challenging legal issues that arise out of applying different laws from different nations, professionals, including lawyers, must assess how our new laws or regulations will affect their obligations to their clients."
The task force will work with representatives of the Department of Justice; the Treasury Department and its Financial Crimes Enforcement Network, known as FinCEN; the Securities and Exchange Commission; and federal bank regulators. This federal interagency task force is examining the roles of lawyers, accountants, and auditors in detection and deterrence of money laundering. Among approaches under consideration are enhanced professional education, standards, rules, and legislation.
Hirshon noted that international antimoney laundering efforts could profoundly affect the ethical obligations of lawyers in the United States. "It is entirely possible that some of the international approaches, if adopted by our government, will produce fundamental changes in the U.S. legal profession," he said.
"Those changes could seriously threaten the confidential relationship between lawyers and their clients, and the ability of clients to consult with lawyers with the trust and candor that confidentiality is intended to foster."
He noted that the United States is a member of the Financial Action Task Force, which has called upon countries to consider means to address money laundering through their professional "gatekeepers" of the international financial system. The Financial Action Task Force is expected to issue recommendations to its members in May, when the U.S. government may simultaneously recommend domestic policy.
Measures being considered by the Financial Action Task Force in response to that call include regulatory systems already adopted by the European Union, the United Kingdom, the Channel Islands, Canada, and Switzerland. Those systems include varying degrees of requirements for lawyers to identify clients whose activities might involve money laundering, conduct client due diligence, maintain records about clients, and report "suspicious" client activities to enforcement authorities. They may also restrict lawyers from informing clients when suspicious activity reports are filed. The directive adopted by the European Union carves out exceptions for lawyers engaged in "legal advice," in contrast to those "participating in corporate or financial transactions." But those distinctions may not be clear in many transactions, said Hirshon.
For an in-depth report on the topic, see Criminal Justice magazine’s Winter 2002 issue that carried the article "Gatekeepers Initiative: Seeking Middle Ground Between Client and Government" by Bruce Zagaris, who specializes in international criminal law.