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Lawyers and Money Laundering

By Howard W. Goldstein
May 27, 2008

As anti-money laundering enforcement has become an international priority, financial institutions around the world increasingly rely on lawyers to help them navigate stringent anti-money laundering regulations enforced by criminal penalties. While the duty of lawyers representing financial institutions in the United States is almost solely toward their clients, in the European Union, lawyers have affirmative obligations to report suspected money-laundering activity to government authorities. In other words, lawyers may be involuntarily conscripted as enforcement agents or 'gatekeepers' at the institutions they represent. American lawyers in the European offices of U.S.-based 'international' law firms are not exempt. In some countries, they face criminal liability if they fail to follow 'know your customer' protocols or fail to report suspicious transactions. Meanwhile, in the United States, such 'gatekeeper' reporting obligations have met stiff resistance by the organized bar and have not been implemented.

Sometimes lost in the debate about 'gatekeeping' is the fact that lawyers in the United States have been, and continue to be, prosecuted for substantive violations of the money-laundering statutes. And as companies become both more sophisticated and more global in their operations, the prosecution possibilities expand. As one commentator noted: 'Lawyers are much more involved in advising clients about how to conduct their business than ever before due to the pervasiveness of the regulation of economic activity. When the lawyer moves from the courtroom to the boardroom, the possibility of a lawyer becoming enmeshed in questionable conduct increases substantially.' Henning, Targeting Legal Advice 54 Am. U.L. Rev., 669, 686 (2005).

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