WASHINGTON—The American Bar Association has passed a resolution opposing any legislation that would require lawyers to flag potentially illicit financial activity by their clients, arguing such a move would violate longstanding principles around client confidentiality.
“The resolution, passed by the American Bar Association’s policy arm, echoes a position the trade group’s president laid out in letters to Congressional leaders last year amid a push by some lawmakers and anticorruption groups to pass legislation that would have imposed stringent anti-money-laundering requirements on lawyers,” the Wall Street Journal reported.
The ABA’s continued opposition is likely to be an obstacle to any efforts to revive the proposal under the current Congressional session, the Journal added.
Support for Further Education
The ABA said it was supporting further education and voluntary guidance on anti-money-laundering procedures to address rising concerns around the role lawyers may play—sometimes inadvertently—in financial crimes. The association also is considering changes to its professional conduct rules around the vetting of clients, the Journal said.
In 2022, lawmakers in Congress pushed for an amendment known as the Enablers Act to be added to an annual military spending bill. The amendment would have extended suspicious-transaction reporting requirements to lawyers and other professionals and businesses—including accountants and private-equity firms—involved in company formation and the transfer of money into the U.S. financial system, the Journal stated.
Seeking to Stop Shell Companies
The report went on to note that under existing regulation, banks and other financial institutions are required to flag suspicious transactions by their customers. More recently, Congress passed a law that requires smaller companies and limited liability partnerships to report information on their owners.
Currently being implemented by the U.S. Treasury Department, the law is intended to curtail the use of anonymous shell companies and the flow of illicit funds, the Journal explained.
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