Laurel S. Terry, The Pennsylvania State University Dickinson School of Law, has made available for download his article, “U.S. Legal Profession Efforts to Combat Money Laundering and Terrorist Financing,” published at 59 New York Law School Law Review 487 (2015). The Abstract is as follows:
This article was prepared for the Symposium on Combating Money Laundering and Terrorist Financing, which was the first academic symposium of its kind, and included speakers from the U.S. Department of the Treasury, the FDIC, and the IRS. It focuses on the legal profession and explains how the US has implemented the FATF Recommendations that address the role that “gatekeepers,” including lawyers, can serve to combat money laundering and terrorist financing.
After setting forth introductory material about the intergovernmental organization called the Financial Action task Force or FATF, the FATF Recommendations, and the degree to which the FATF Recommendations have influenced lawyer regulation in other countries, this article examines the manner in which the U.S. government and the legal profession have implemented the FATF Recommendations. The article explains that U.S. lawyers are subject to both criminal and disciplinary sanctions for knowingly engaging in money laundering or terrorist financing or assisting clients involved in such activities. The US actively enforces these provisions and US lawyers have been criminally prosecuted, convicted, and disbarred for assisting clients in money laundering.
Because of the wide array of existing laws that prohibit lawyers from assisting clients who are engaged in money laundering or terrorist financing activities, the U.S. legal profession has focused on what might be called “application” issues. Numerous efforts have been undertaken to educate lawyers so that they recognize the types of situations and fact patterns in which these types of criminals seek to involve lawyers in their activities. The goal of this type of education approach is to make lawyers as sensitive to money laundering and terrorist financing issues at the intake stage as these lawyers are to issues such as conflicts of interest. Moreover, as is true with a conflict of interest analysis, lawyers must continually reassess the situation as new facts emerge. Both the ethics rules and criminal law require lawyers to decline (or terminate) representation if it would result in lawyers assisting client in their criminal activities. The goal of this type of education approach is to have lawyers internalize these issues, rather than simply engaging in a formalistic “check-off-the-box” approach to these issues.
This article documents the education steps that already have been undertaken and outlines some additional steps that could be taken in the future. It concludes that while there is still education work to be done, progress has been made.
This article should prove useful when the U.S. undergoes its 4th Mutual Evaluation as a member of the intergovernmental Financial Action Task Force (FATF). During its previous Mutual Evaluation, the U.S. received several “non-compliant” ratings with respect to the U.S. legal profession. Since that time, the U.S. legal profession has undertaken a number of additional steps in the effort to educate lawyers so that lawyers do not unwittingly assist clients in these criminal activities. (U.S. legal profession representatives have expressed the view that if a lawyer is intentionally engaged in, or assisting, criminal money laundering or terrorist financing, then it is unlikely that additional rules or sanctions would discourage the lawyer, given the existing criminal and disciplinary sanctions.)
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.