Organization for Economic Cooperation and Development (OECD)

Subscribe to Organization for Economic Cooperation and Development (OECD)

American Bar Association Revises Model Rule of Professional Conduct to Combat Money Laundering

By Andrew N. D'Aversa on August 17, 2023

Posted in Anti-Money Laundering (AML), Attorney Client Privilege, Attorney Liability, Customer Due Diligence, Financial Action Task Force (FATF), Organization for Economic Cooperation and Development (OECD), Panama Papers, Pandora Papers

On August 8, 2023, the American Bar Association (“ABA”) House of Delegates voted overwhelmingly (216–102) to pass Revised Resolution 100 (the “Resolution”), which in turn revised ABA Model Rule of Professional Conduct 1.16 and its Comments (the “Rule”) to explicitly recognize a lawyer’s duty to assess the facts and circumstances of a representation at the time the lawyer is engaged and throughout the representation to ensure that the lawyer’s services are not used to “commit or further a crime or fraud.”

The Comments to the Rule clearly illustrate that the ABA is concerned with the use of a lawyer’s services to—wittingly or unwittingly—assist clients in laundering money. The Resolution itself acknowledges this, stating “the impetus for these proposed amendments was lawyers’ unwitting involvement in or failure to pay appropriate attention to signs or warnings of danger . . . relating to a client’s use of a lawyer’s services to facilitate possible money laundering and terrorist financing activities.” And the ABA’s press release echoes this concern, noting the Rule was revised “because of concern that lawyers’ services can be used for money laundering and other criminal and fraudulent activity.”

Continue Reading American Bar Association Revises Model Rule of Professional Conduct to Combat Money Laundering

United States “Beats” Switzerland as a Perceived Global Haven for Money Laundering and Tax Evasion

By Peter D. Hardy & Alicia M. Went on February 20, 2020

Posted in Beneficial Ownership, Foreign Account Tax Compliance Act (FATCA), Information Sharing, International Tax Evasion, Offshore Account, Organization for Economic Cooperation and Development (OECD)

The Cayman Islands Receive “Top Honors.” But, Global Financial Transparency is Reportedly Improving in General

The United States has overtaken Switzerland as a financial secrecy haven, according to the latest rankings – the Financial Secrecy Index 2020 (“2020 Index”) – issued by the Tax Justice Network (“TJN”), which describes itself in part as an independent international network conducting research, analysis and advocacy on international tax and financial regulation and the impact of tax evasion and avoidance. According to the 2020 Index, the U.S. now has the dubious distinction of holding second place in these rankings, having “lost” only to the Cayman Islands for first place.

As always, such reports and rankings, which purport to present incredibly complex and fluid systems as neatly distilled rankings, based on numerical factors presented with seeming objective precision, must be taken with a grain of salt. Invariably, they simplify issues and reflect implicit, subjective and potentially biased judgments. Nonetheless, the 2020 Index represents the latest in a string of international pronouncements turning an uncomfortable spotlight on the U.S., which (as we have blogged here, here and here) appears to be increasingly viewed by the rest of the world as a (hypocritical) haven for money laundering and tax evasion. Switzerland may regard having been “trumped” by the U.S. in these rankings with a bit of irony and schadenfreud, given the lengthy campaign by the U.S. to battle Switzerland’s banking and tax secrecy laws and customs, including many prosecutions by the U.S. involving undisclosed offshore accounts held by U.S. taxpayers in Switzerland (and elsewhere). Certainly, the 2020 Index highlights the substantial intersection between money laundering and tax evasion, both of which thrive in environments where anonymous shell companies may proliferate.
Continue Reading United States “Beats” Switzerland as a Perceived Global Haven for Money Laundering and Tax Evasion

AML Due Diligence Standards for U.S. Lawyers

By Peter D. Hardy on July 4, 2017

Posted in Anti-Money Laundering (AML), Attorney Client Privilege, Attorney Liability, Beneficial Ownership, Customer Due Diligence, Financial Action Task Force (FATF), International Tax Evasion, Organization for Economic Cooperation and Development (OECD), Undercover Investigations

A Guest Blog by Bruce Zagaris, Esq.

Today we are very pleased to welcome guest blogger Bruce Zagaris, who is a Partner at the Washington, D.C. law firm of Berliner, Corcoran & Rowe. He is the editor of the International Enforcement Law Reporter; the author of International White Collar Crime: Cases and Materials; and an Adjunct Professor at the Texas A & M University School of Law. Mr. Zagaris also is a member of the Task Force on the Gatekeeper and the Profession of the American Bar Association (“ABA”).

As Mr. Zagaris explains immediately below, growing international trends have led the ABA Task Force to consider a new Model Rule of Professional Conduct that would impose basic “client due diligence” requirements on U.S. lawyers to determine whether their clients are engaging in money laundering or terrorist financing. This development relates directly to issues about which we previously have blogged, including European perceptions of lawyers as potential gatekeepers and of the United States as a haven for money laundering and tax evasion. The possible new Model Rule potentially would represent a significant shift in how the U.S. legal profession regards itself and its relationship to its clients. We hope that you enjoy this discussion by Mr. Zagaris of these important issues. -Peter Hardy

Increasingly, international bodies are calling for higher standards for gatekeepers, known in the parlance of the Financial Action Task Force (“FATF”) as “designated non-financial businesses and professions” (“DNFBPs”). DNFBPs include lawyers, accountants, real estate agents, and trust and company service providers (other than trust companies). In particular, in the United States, lawyers play a key role in areas that give rise to potential money laundering: company formation; real estate transactions; business planning; tax planning; wealth management; trust and estate work; and formation and operation of charities, including transnational philanthropy.

In 2006 and again in 2016, the FATF, an intergovernmental body in charge of making and overseeing compliance with international money laundering standards, performed Mutual Evaluation Reports (“MERs”) to assess compliance by the United States with international standards. While the FATF gave the U.S. high marks generally, both MERs found the U.S. “non-compliant” in gatekeepers and entity transparency.

As a result of this international trend, the ABA’s Task Force on the Gatekeeper and the Profession has prepared and discussed a new ABA Model Rule of Professional Conduct that would impose basic “client due diligence” requirement on lawyers. We discuss this potential new model rule, and the developments which have led to its consideration, below. Clearly, due diligence for lawyers will increasingly be on the radars of banks, financial institutions, and law firms.
Continue Reading AML Due Diligence Standards for U.S. Lawyers

European Parliament: The U.S. is a Haven for Tax Cheats and Money Launderers

By Peter D. Hardy on March 9, 2017

Posted in Anti-Money Laundering (AML), Beneficial Ownership, Currency Transaction Report (CTR), Customer Due Diligence, Financial Action Task Force (FATF), Financial Crimes Enforcement Network (FinCEN), Form 8300, International Tax Evasion, Organization for Economic Cooperation and Development (OECD), Panama Papers, Real Estate

"Group of pedestrians walking on a cobbled street, sharing the frame with their bag-carrying shadows"

Earlier this week, we blogged about how the United States recently declared the Philippines to be a “major money laundering country.” On the same day of our post, March 7, the European Parliament (EP) issued a Report which describes the United States as a growing haven for tax evasion and money laundering. Specifically, the Report concludes that the United States “is seen as an emerging leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, it provides an array of secrecy and tax-free facilities for non-residents at federal and state levels, notably in Nevada, Delaware, Wyoming, and South Dakota.”
Continue Reading European Parliament: The U.S. is a Haven for Tax Cheats and Money Launderers

Menu

Money Laundering Watch