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Bar News - August 23, 2013

Lawyers, Guns & Money

ABA offers guidance on due diligence with clients to avoid aiding money-laundering

American Bar Association President Laurel G. Bellows has asked bar associations to relay a message to their members regarding national efforts to fight money-laundering while preserving the independence of the legal profession.

Attorneys are asked to read the recent ABA Formal Ethics Opinion 463, which encourages lawyers to engage in appropriate client due diligence to avoid inadvertently participating in or facilitating money-laundering or terrorist-financing activities.

“Client Due Diligence” is described in detail, along with a number of “practice pointers,” in the August 2010 document (44-page PDF), Voluntary Good Practices Guidance for Lawyers to Detect and Combat Money Laundering and Terrorist Financing. In short, client due diligence includes: (1) identifying and verifying the identity of each client; (2) identifying and verifying the identity of anyone ultimately controlling the client; and (3) obtaining enough information to understand a client’s circumstances, business, and objectives.

The ABA believes the Voluntary Guidance, which encourages lawyers to take a tailored, “risk-based” approach to client due diligence, is the most effective means of both combating money laundering and avoiding government adoption of much more burdensome “rules-based” laws and regulations that could undermine attorney-client privilege and confidentiality, as well as traditional state oversight of the legal profession.

The ABA’s position on “Gatekeeper Regulation of Lawyers” has consistently been: “Although the ABA supports reasonable and balanced initiatives to combat money laundering and terrorist financing, the ABA opposes any law or regulation that would compel lawyers to disclose confidential information to government officials or otherwise compromise the attorney-client privilege, the lawyer-client relationship, traditional state court regulation of lawyers, or the independence of the bar.” This policy, crafted by the Task Force on Gatekeeper Regulation and the Profession, was first adopted by the ABA in 2003 and later reinforced and expanded in 2008 and 2010.

Visit the ABA’s website advocacy pages for “Independence of the Legal Profession” and look for the ABA policy statement on Gatekeeper Regulation of Lawyers.

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