To help federal regulators combat money laundering, which is estimated by the U.S. Department of Treasury to exceed $300 billion a year, the American Bar Association has moved in recent weeks to both strengthen model rules that deal with a lawyer's duty to perform client due diligence and expand association policy.
At its August 2023 meeting, the policymaking ABA House of Delegates (HOD) is expected to consider recommendations that would clarify a lawyer's client due diligence obligations under Model Rule 1.16 (Declining or Terminating Representation). Two Center for Professional Responsibility (CPR) entities announced in February their intention to propose strengthening the model rule to say that a lawyer must gather information and "assess the facts and circumstances of each representation" to ensure that the client is not using the lawyer's services to commit a crime.
The proposed revision makes clear that the lawyer must conduct client due diligence to avoid becoming a participant in a client's criminal acts and the revision would require the lawyer to decline or withdraw from representing a client who persisted in using the lawyer's services to commit a crime.
Any changes would follow new ABA policy adopted by the HOD on February 6, which endorsed reasonable and appropriate federal legislation and regulations that allow federal authorities to unmask actual owners of assets and collect the identities of the assets' owners. The ABA's past position emphasized that these powers should be the purview of the states.
Specifically, the policy urges that any governmental disclosure requirements placed upon a business or other legal entity should also protect that person's constitutional rights and confidentiality interests, including the traditional lawyer-client relationship. The ABA policy also says these requirements should "not undermine the applicable rules of professional conduct to which lawyers are subject."
The new policy also urges key stakeholders in the legal profession to educate lawyers and law students about the scope of money laundering laws and the anti-money laundering requirements that apply to lawyers to prevent the profession from being used to facilitate money laundering.
With the large amount of money laundering estimated to take place each year, lawyers and other professions have been pressured to adopt anti-money laundering procedures that can help detect, flag and prevent the laundering of corrupt funds into the U.S.
