Those involved in business formations may unknowingly be violating professional conduct rules. As compliance requirements evolve to protect against money laundering, terrorism, and tax evasion, it has become harder for attorneys to keep up. But those who fail to comply can face serious fines and may even lose their license altogether.
Join this on-demand webinar to safeguard against ethical violations. Attendees will have a better understanding of compliance requirements, new and emerging legislation, and best practices for new client due diligence.
Learn about:
- The intersection of business formation and money laundering/terrorism/tax evasion
- How attorney-client privilege is impacted by current and emerging legislation
- Penalties for doing business with certain risk groups
- The ABA's Gatekeeper initiative that offers risk-based guidance
- Ethical considerations of potential anti-money laundering requirements for lawyers
- Due Diligence guidelines to prevent ethical dilemmas
Meet our expert:
Garth Jacobson, Esq. – CT Government Relations and Regional Attorney
Garth B. Jacobson serves as a Senior Government Relations Attorney for CT Corporation. Prior to this position, he worked at Preston Gates and Ellis LLP. Previously, he held the position of Chief Legal Counsel to the Montana Secretary of State where he successfully litigated election law cases before the state trial and appellant courts and federal courts. During that tenure, he served on the state bar committees that drafted business entity legislation including profit and nonprofit corporate acts, revisions to the partnership laws and the limited liability company act. Additionally, he developed and administered alternative dispute resolution of business name infringements. He served on the Montana Ethics Advisory Commission. He also served on the Board of Trustees of the State Bar of Montana and was also the president of the First Judicial District Bar Association.
Anti money laundering laws Pakistan with comparison of International lawsShehroz Adil
The document discusses anti-money laundering laws and regulations. It defines money laundering and outlines the process. It estimates that $800 billion to $2 trillion may be laundered annually worldwide. Several international bodies work to combat money laundering, including the UN, FATF, IMF, and World Bank. Pakistan has passed several acts and an ordinance to comply with FATF standards and amend its anti-money laundering laws. The document also discusses specific cases of alleged money laundering and international laws and requirements regarding anti-money laundering.
it was a project assignment by our banking teacher related to an article published in dawn news paper kindly give your suggestions fa first time try :)
Money laundering refers to the process of making illegally gained money appear legal. It involves three stages: placement, layering, and integration. Criminals launder money to hide wealth from authorities, avoid prosecution, evade taxes, increase profits by reinvesting funds, and provide legitimacy to businesses. Common criminals that launder money include drug dealers, mobsters, terrorists, corrupt politicians, embezzlers, and public officials. They employ techniques like structuring deposits, connected accounts, and investment products. Banks can prevent money laundering by reporting suspicious activities, knowing customers, maintaining records, and cooperating globally and through organizations like FATF.
The FATF is an inter-governmental body that establishes standards for combating money laundering and terrorist financing. It comprises over 200 member countries that have committed to implementing the FATF Recommendations. The Recommendations establish global standards for anti-money laundering and counter-terrorist financing systems. Implementing the Recommendations effectively helps secure financial systems, build terrorism financing tracing capacity, and avoid sanctions.
The document discusses AML/CFT compliance services in the UAE. It notes that governments are increasing scrutiny of AML/CFT processes to fight financial crimes. Firms must comply with minimum standards or face penalties. In 2020, the UAE formed an Executive Office of Anti-Money Laundering to follow international requirements. HLB HAMT provides AML/CFT compliance assessments and advisory services to help organizations develop, implement, and enhance their compliance regimes across multiple sectors. Key services include AML compliance advisory to help financial institutions and designated non-financial businesses comply with changing regulations.
This document provides an overview of key concepts in the United Arab Emirates' (UAE) anti-money laundering (AML) laws and regulations based on the Financial Action Task Force (FATF) standards. It summarizes definitions and requirements around predicate offenses, suspicious activity reporting, international cooperation, and the role of the Central Bank and independent Financial Intelligence Unit. Key articles of the UAE's Federal Decree Law Number (20) of 2018 on money laundering are also briefly explained.
The document discusses money laundering and anti-money laundering (AML) laws and organizations. It defines money laundering as the process of making illegally gained money appear legal. It also discusses terrorist financing. The objective, stages, techniques, and causes of money laundering are described. Key AML laws and organizations mentioned are the Prevention of Money Laundering Act 2002 in India and the Financial Action Task Force, an intergovernmental body working to combat money laundering and terrorist financing globally.
The document discusses anti-money laundering and countering the financing of terrorism. It defines money laundering and terrorist financing, and outlines the international and New Zealand frameworks. The new New Zealand regime imposes stricter obligations on reporting entities like customer due diligence and compliance programs. Non-AML regulators must ensure accurate registry data and cooperate due to interplays with other risks like sanctions, bribery, and tax evasion. AML/CFT detection requires cooperation across agencies.
Anti money laundering laws Pakistan with comparison of International lawsShehroz Adil
The document discusses anti-money laundering laws and regulations. It defines money laundering and outlines the process. It estimates that $800 billion to $2 trillion may be laundered annually worldwide. Several international bodies work to combat money laundering, including the UN, FATF, IMF, and World Bank. Pakistan has passed several acts and an ordinance to comply with FATF standards and amend its anti-money laundering laws. The document also discusses specific cases of alleged money laundering and international laws and requirements regarding anti-money laundering.
it was a project assignment by our banking teacher related to an article published in dawn news paper kindly give your suggestions fa first time try :)
Money laundering refers to the process of making illegally gained money appear legal. It involves three stages: placement, layering, and integration. Criminals launder money to hide wealth from authorities, avoid prosecution, evade taxes, increase profits by reinvesting funds, and provide legitimacy to businesses. Common criminals that launder money include drug dealers, mobsters, terrorists, corrupt politicians, embezzlers, and public officials. They employ techniques like structuring deposits, connected accounts, and investment products. Banks can prevent money laundering by reporting suspicious activities, knowing customers, maintaining records, and cooperating globally and through organizations like FATF.
The FATF is an inter-governmental body that establishes standards for combating money laundering and terrorist financing. It comprises over 200 member countries that have committed to implementing the FATF Recommendations. The Recommendations establish global standards for anti-money laundering and counter-terrorist financing systems. Implementing the Recommendations effectively helps secure financial systems, build terrorism financing tracing capacity, and avoid sanctions.
The document discusses AML/CFT compliance services in the UAE. It notes that governments are increasing scrutiny of AML/CFT processes to fight financial crimes. Firms must comply with minimum standards or face penalties. In 2020, the UAE formed an Executive Office of Anti-Money Laundering to follow international requirements. HLB HAMT provides AML/CFT compliance assessments and advisory services to help organizations develop, implement, and enhance their compliance regimes across multiple sectors. Key services include AML compliance advisory to help financial institutions and designated non-financial businesses comply with changing regulations.
This document provides an overview of key concepts in the United Arab Emirates' (UAE) anti-money laundering (AML) laws and regulations based on the Financial Action Task Force (FATF) standards. It summarizes definitions and requirements around predicate offenses, suspicious activity reporting, international cooperation, and the role of the Central Bank and independent Financial Intelligence Unit. Key articles of the UAE's Federal Decree Law Number (20) of 2018 on money laundering are also briefly explained.
The document discusses money laundering and anti-money laundering (AML) laws and organizations. It defines money laundering as the process of making illegally gained money appear legal. It also discusses terrorist financing. The objective, stages, techniques, and causes of money laundering are described. Key AML laws and organizations mentioned are the Prevention of Money Laundering Act 2002 in India and the Financial Action Task Force, an intergovernmental body working to combat money laundering and terrorist financing globally.
The document discusses anti-money laundering and countering the financing of terrorism. It defines money laundering and terrorist financing, and outlines the international and New Zealand frameworks. The new New Zealand regime imposes stricter obligations on reporting entities like customer due diligence and compliance programs. Non-AML regulators must ensure accurate registry data and cooperate due to interplays with other risks like sanctions, bribery, and tax evasion. AML/CFT detection requires cooperation across agencies.
This document discusses money laundering, including how it has become a global threat due to factors like globalization and technology. It describes the processes involved in money laundering as placement, layering, and integration. International responses to money laundering are also summarized, such as the Vienna and Strasbourg conventions, as well as the Financial Action Task Force. Finally, the document argues that money laundering proceeds should be used to benefit society through education, poverty alleviation, and other means in the interests of social justice.
Financial institutions play a key role in detecting, preventing, and controlling money laundering and terrorism financing through continuous monitoring of customer relationships and timely reporting of suspicious activities. They must follow know-your-customer procedures and report currency transactions, funds transfers, and other activity to the Financial Crimes Enforcement Network. This helps law enforcement maintain security and integrity in the global financial system.
The document discusses anti-money laundering laws and regulations in the Philippines. It begins with a definition of money laundering and an overview of the history and origins of anti-money laundering efforts. It then outlines key entities like the Financial Action Task Force (FATF) and their recommendations. The document explains the three stages of money laundering and how it relates to other crimes. It also defines key terms like suspicious transactions, covered institutions, and the roles and functions of the Anti-Money Laundering Council (AMLC) established under the Anti-Money Laundering Act of 2001.
This document discusses the implementation of anti-money laundering (AML) and know-your-customer (KYC) solutions in banks. It outlines the importance of AML/KYC compliance for regulatory requirements and reputational risk. The key aspects of a successful implementation strategy include establishing clear laws and regulations, gaining top management commitment, defining clear accountabilities and robust controls, providing technological support, and building awareness and a strong compliance culture throughout the organization. Continuous monitoring is also essential to ensure the internal controls are working as intended.
FinCEN was created in 1990 as part of the Treasury Department to support law enforcement efforts against money laundering and other financial crimes. It collects and analyzes financial transaction reports under the Bank Secrecy Act to identify patterns indicating money laundering, terrorist financing, and other illicit activities. FinCEN regulates over 100,000 financial institutions and provides intelligence and case support to federal, state and local law enforcement agencies through over 6,500 reports annually. It also works with international partners to combat financial crimes globally and help other countries establish similar financial intelligence units.
This document discusses trade and financial sanctions and their implications for organizations. It covers topics such as what sanctions are, determining if an organization possesses property owned by designated persons, preventing transactions involving sanctioned entities, and reporting requirements. The document provides guidance on searching client lists against sanctions lists, resolving potential matches, freezing identified property, and exceptions to freezing rules.
Basics of Anti-Money Laundering : A Really Quick Primer
What is Money Laundering?
The act of concealing or disguising (laundering) of funds obtained through illegal activity
so that they appear to have been generated through legal, legitimate sources.
How is it Carried Out?
Shell companies, intermediaries and money transmitters usually transfer these funds around the world Banks and other financial institutions are the chosen medium for laundering these illegal funds
AML Regulations:
The Bank Secrecy Act is the most important Anti-Money Laundering (AML) regulation
The BSA requires financial institutions to:
Keep records of cash purchases of negotiable instruments
File reports of cash transactions exceeding $10,000 (daily aggregate amount)
Report suspicious activity that might signify money laundering, tax evasion, or other criminal activities
Implement a written, board-approved compliance monitoring program
The USA Patriot Act
Expands AML requirements to all financial institutions
Augments existing BSA framework
AML Best Practices:
In order to combat money laundering, banks should implement the following best practices:
Customer Identification Program (CIP)
Customer Due Diligence (CDD) Program
Bank Secrecy Act/Anti-Money Laundering Risk Assessment
Identification and Reporting of Suspicious Activity
Want to learn more about anti-money laundering process and best practices? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
http://www.complianceonline.com/anti-money-laundering-aml-compliance-program-seminar-training-80114SEM-prdsm?channel=amlppt
http://www.complianceonline.com/bsa-aml-ofac-risk-assessments-regulatory-requirements-seminar-training-80181SEM-prdsm?channel=ppt
http://www.complianceonline.com/bsa-aml-compliance-reporting-requirements-webinar-training-703352-prdw?channel=amlppt
http://www.complianceonline.com/bsa-aml-compliance-checklists-webinar-training-703178-prdw?channel=amlppt
http://www.complianceonline.com/bsa-aml-ofac-risk-assessments-and-evaluation-compliance-program-webinar-training-703493-prdw?channel=amlppt
http://www.complianceonline.com/best-practices-for-developing-risk-models-for-aml-bsa-monitoring-webinar-training-703628-prdw?channel=amlppt
Interesting articles talking about money laundering activities and how the AML law shares an inverse relationship with the money laundering activity. This questions the overall cost/benefit activity of the AML regulation.
Money laundering involves disguising illegally obtained money to make it appear legitimate. It is a major global problem, representing up to 5% of global GDP. Laws against money laundering help combat corruption by making it riskier for corrupt officials to hide bribes and illicit funds. While anti-money laundering efforts have increased international cooperation and transparency, challenges remain such as building legal capacity and tracing complex financial transactions across borders. Strong anti-money laundering regulations and law enforcement are needed to curb corruption and criminal activities.
Anti-money Laundering:-
The process of disguising the proceeds of crime in an effort to conceal their illicit origins and legitimize their future use. Its main objective is to conceal true ownership and origin of the proceeds, a desire to maintain control, a need to change the form of the proceeds.Techniques used can be simple, diverse, complex, but secret.
Money laundering is the process of making illegally obtained money appear legal. This document discusses how criminals first place illegal funds into the financial system through various techniques like structuring deposits to avoid reporting requirements, using alternative remittance systems, or purchasing assets or insurance policies. It then explains how launderers further layer the funds by moving them through many transactions to obscure their source and make the money harder to trace back to criminal activity. Kenya's new anti-money laundering law aims to regulate these processes but questions remain over successful implementation.
Money Laundering by Vivek Singh,Aryan CollegeAryan Ajmer
Money laundering involves criminals disguising illegally obtained money to make it appear legitimate. There are three stages to the money laundering process: placement, layering, and integration. Placement involves getting illicit cash into the financial system. Layering follows, moving funds between institutions to obscure the audit trail. Integration makes the funds appear legitimate by investing them into front companies. Money laundering undermines economies by diverting capital away from development and depressing growth. Anti-money laundering regulations and programs aim to stop these illegal activities.
The document discusses money laundering, including the stages of money laundering (placement, layering, integration). It notes that the Prevention of Money Laundering Act was enforced in India in 2002. High risk countries for money laundering are listed as those linked to terrorism, drug production, and corruption. Effects of money laundering include increased crime and loss of tax revenue. Anti-money laundering regulations and efforts in various countries are outlined, including know-your-customer (KYC) requirements which help financial institutions understand customer sources of funds and business activities.
How to Improve Anti-Money Laundering Investigation using Neo4jNeo4j
This document outlines how Neo4j can help improve anti-money laundering investigations. It begins with defining money laundering and providing examples of entities that may engage in it. It then discusses relevant anti-money laundering regulations and typical problems investigators face, such as high false positive rates and difficulty connecting related data points. The presentation demonstrates how Neo4j can help by connecting disparate data using graph patterns, making it easier to spot suspicious behavior and money laundering rings.
This document discusses politically exposed persons (PEPs) and anti-money laundering practices related to PEPs. It defines PEPs as individuals who hold or have held prominent public positions in foreign governments. While state-owned enterprises are not considered PEPs, senior individuals who manage them could qualify as PEPs. Banks should have risk management systems to identify PEP customers and apply enhanced due diligence, such as obtaining senior management approval and assessing the source of wealth. One typically remains considered a PEP for one year after leaving a political position. Banks can do business with PEPs by applying enhanced scrutiny and monitoring the relationship. Focusing on PEPs helps combat corruption and money laundering risks.
Money laundering involves disguising illegally obtained money to make it appear legitimate. It typically involves three steps: placement, layering, and integration. Money laundering can undermine the legitimacy and integrity of financial markets and lead to economic instability. Governments and international organizations have established laws and recommendations to prevent money laundering, including know-your-customer compliance, cash transaction reporting, and monitoring by groups like the Financial Action Task Force. New technologies also pose evolving threats, requiring advanced anti-money laundering mechanisms.
Malaysia established various entities and frameworks to combat money laundering, including establishing a Financial Intelligence Unit (FIU) in Bank Negara Malaysia in 2001. When establishing the FIU, key issues that had to be addressed included building stakeholder confidence, ensuring reporting institution compliance, and developing expertise. Resolutions involved guidelines, training, and establishing legal and regulatory frameworks. The FIU works with domestic partners and international organizations to analyze financial intelligence and support law enforcement consistent with international standards. Ongoing challenges include organizational effectiveness and timely response to money laundering trends.
Money laundering refers to disguising illegally obtained money to make it appear legitimate. It involves three steps - placement, layering, and integration. Criminals like drug dealers, mobsters, corrupt politicians, and terrorists engage in money laundering to hide the source and destination of funds from illegal activities. Key causes of money laundering include tax evasion, increasing profits from crime, and limited risks of exposure. Money laundering distorts economies, increases corruption and crime, undermines financial market integrity, and risks countries' reputations.
The document discusses money laundering prevention. It outlines the objectives of increasing awareness of anti-money laundering responsibilities and regulations. Non-compliance can result in penalties like imprisonment, fines, license revocation and more. Key aspects of money laundering prevention covered include know-your-customer procedures, suspicious transaction reporting, and the importance of monitoring transactions for consistency with customer profiles.
This document discusses money laundering, including how it has become a global threat due to factors like globalization and technology. It describes the processes involved in money laundering as placement, layering, and integration. International responses to money laundering are also summarized, such as the Vienna and Strasbourg conventions, as well as the Financial Action Task Force. Finally, the document argues that money laundering proceeds should be used to benefit society through education, poverty alleviation, and other means in the interests of social justice.
Financial institutions play a key role in detecting, preventing, and controlling money laundering and terrorism financing through continuous monitoring of customer relationships and timely reporting of suspicious activities. They must follow know-your-customer procedures and report currency transactions, funds transfers, and other activity to the Financial Crimes Enforcement Network. This helps law enforcement maintain security and integrity in the global financial system.
The document discusses anti-money laundering laws and regulations in the Philippines. It begins with a definition of money laundering and an overview of the history and origins of anti-money laundering efforts. It then outlines key entities like the Financial Action Task Force (FATF) and their recommendations. The document explains the three stages of money laundering and how it relates to other crimes. It also defines key terms like suspicious transactions, covered institutions, and the roles and functions of the Anti-Money Laundering Council (AMLC) established under the Anti-Money Laundering Act of 2001.
This document discusses the implementation of anti-money laundering (AML) and know-your-customer (KYC) solutions in banks. It outlines the importance of AML/KYC compliance for regulatory requirements and reputational risk. The key aspects of a successful implementation strategy include establishing clear laws and regulations, gaining top management commitment, defining clear accountabilities and robust controls, providing technological support, and building awareness and a strong compliance culture throughout the organization. Continuous monitoring is also essential to ensure the internal controls are working as intended.
FinCEN was created in 1990 as part of the Treasury Department to support law enforcement efforts against money laundering and other financial crimes. It collects and analyzes financial transaction reports under the Bank Secrecy Act to identify patterns indicating money laundering, terrorist financing, and other illicit activities. FinCEN regulates over 100,000 financial institutions and provides intelligence and case support to federal, state and local law enforcement agencies through over 6,500 reports annually. It also works with international partners to combat financial crimes globally and help other countries establish similar financial intelligence units.
This document discusses trade and financial sanctions and their implications for organizations. It covers topics such as what sanctions are, determining if an organization possesses property owned by designated persons, preventing transactions involving sanctioned entities, and reporting requirements. The document provides guidance on searching client lists against sanctions lists, resolving potential matches, freezing identified property, and exceptions to freezing rules.
Basics of Anti-Money Laundering : A Really Quick Primer
What is Money Laundering?
The act of concealing or disguising (laundering) of funds obtained through illegal activity
so that they appear to have been generated through legal, legitimate sources.
How is it Carried Out?
Shell companies, intermediaries and money transmitters usually transfer these funds around the world Banks and other financial institutions are the chosen medium for laundering these illegal funds
AML Regulations:
The Bank Secrecy Act is the most important Anti-Money Laundering (AML) regulation
The BSA requires financial institutions to:
Keep records of cash purchases of negotiable instruments
File reports of cash transactions exceeding $10,000 (daily aggregate amount)
Report suspicious activity that might signify money laundering, tax evasion, or other criminal activities
Implement a written, board-approved compliance monitoring program
The USA Patriot Act
Expands AML requirements to all financial institutions
Augments existing BSA framework
AML Best Practices:
In order to combat money laundering, banks should implement the following best practices:
Customer Identification Program (CIP)
Customer Due Diligence (CDD) Program
Bank Secrecy Act/Anti-Money Laundering Risk Assessment
Identification and Reporting of Suspicious Activity
Want to learn more about anti-money laundering process and best practices? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
http://www.complianceonline.com/anti-money-laundering-aml-compliance-program-seminar-training-80114SEM-prdsm?channel=amlppt
http://www.complianceonline.com/bsa-aml-ofac-risk-assessments-regulatory-requirements-seminar-training-80181SEM-prdsm?channel=ppt
http://www.complianceonline.com/bsa-aml-compliance-reporting-requirements-webinar-training-703352-prdw?channel=amlppt
http://www.complianceonline.com/bsa-aml-compliance-checklists-webinar-training-703178-prdw?channel=amlppt
http://www.complianceonline.com/bsa-aml-ofac-risk-assessments-and-evaluation-compliance-program-webinar-training-703493-prdw?channel=amlppt
http://www.complianceonline.com/best-practices-for-developing-risk-models-for-aml-bsa-monitoring-webinar-training-703628-prdw?channel=amlppt
Interesting articles talking about money laundering activities and how the AML law shares an inverse relationship with the money laundering activity. This questions the overall cost/benefit activity of the AML regulation.
Money laundering involves disguising illegally obtained money to make it appear legitimate. It is a major global problem, representing up to 5% of global GDP. Laws against money laundering help combat corruption by making it riskier for corrupt officials to hide bribes and illicit funds. While anti-money laundering efforts have increased international cooperation and transparency, challenges remain such as building legal capacity and tracing complex financial transactions across borders. Strong anti-money laundering regulations and law enforcement are needed to curb corruption and criminal activities.
Anti-money Laundering:-
The process of disguising the proceeds of crime in an effort to conceal their illicit origins and legitimize their future use. Its main objective is to conceal true ownership and origin of the proceeds, a desire to maintain control, a need to change the form of the proceeds.Techniques used can be simple, diverse, complex, but secret.
Money laundering is the process of making illegally obtained money appear legal. This document discusses how criminals first place illegal funds into the financial system through various techniques like structuring deposits to avoid reporting requirements, using alternative remittance systems, or purchasing assets or insurance policies. It then explains how launderers further layer the funds by moving them through many transactions to obscure their source and make the money harder to trace back to criminal activity. Kenya's new anti-money laundering law aims to regulate these processes but questions remain over successful implementation.
Money Laundering by Vivek Singh,Aryan CollegeAryan Ajmer
Money laundering involves criminals disguising illegally obtained money to make it appear legitimate. There are three stages to the money laundering process: placement, layering, and integration. Placement involves getting illicit cash into the financial system. Layering follows, moving funds between institutions to obscure the audit trail. Integration makes the funds appear legitimate by investing them into front companies. Money laundering undermines economies by diverting capital away from development and depressing growth. Anti-money laundering regulations and programs aim to stop these illegal activities.
The document discusses money laundering, including the stages of money laundering (placement, layering, integration). It notes that the Prevention of Money Laundering Act was enforced in India in 2002. High risk countries for money laundering are listed as those linked to terrorism, drug production, and corruption. Effects of money laundering include increased crime and loss of tax revenue. Anti-money laundering regulations and efforts in various countries are outlined, including know-your-customer (KYC) requirements which help financial institutions understand customer sources of funds and business activities.
How to Improve Anti-Money Laundering Investigation using Neo4jNeo4j
This document outlines how Neo4j can help improve anti-money laundering investigations. It begins with defining money laundering and providing examples of entities that may engage in it. It then discusses relevant anti-money laundering regulations and typical problems investigators face, such as high false positive rates and difficulty connecting related data points. The presentation demonstrates how Neo4j can help by connecting disparate data using graph patterns, making it easier to spot suspicious behavior and money laundering rings.
This document discusses politically exposed persons (PEPs) and anti-money laundering practices related to PEPs. It defines PEPs as individuals who hold or have held prominent public positions in foreign governments. While state-owned enterprises are not considered PEPs, senior individuals who manage them could qualify as PEPs. Banks should have risk management systems to identify PEP customers and apply enhanced due diligence, such as obtaining senior management approval and assessing the source of wealth. One typically remains considered a PEP for one year after leaving a political position. Banks can do business with PEPs by applying enhanced scrutiny and monitoring the relationship. Focusing on PEPs helps combat corruption and money laundering risks.
Money laundering involves disguising illegally obtained money to make it appear legitimate. It typically involves three steps: placement, layering, and integration. Money laundering can undermine the legitimacy and integrity of financial markets and lead to economic instability. Governments and international organizations have established laws and recommendations to prevent money laundering, including know-your-customer compliance, cash transaction reporting, and monitoring by groups like the Financial Action Task Force. New technologies also pose evolving threats, requiring advanced anti-money laundering mechanisms.
Malaysia established various entities and frameworks to combat money laundering, including establishing a Financial Intelligence Unit (FIU) in Bank Negara Malaysia in 2001. When establishing the FIU, key issues that had to be addressed included building stakeholder confidence, ensuring reporting institution compliance, and developing expertise. Resolutions involved guidelines, training, and establishing legal and regulatory frameworks. The FIU works with domestic partners and international organizations to analyze financial intelligence and support law enforcement consistent with international standards. Ongoing challenges include organizational effectiveness and timely response to money laundering trends.
Money laundering refers to disguising illegally obtained money to make it appear legitimate. It involves three steps - placement, layering, and integration. Criminals like drug dealers, mobsters, corrupt politicians, and terrorists engage in money laundering to hide the source and destination of funds from illegal activities. Key causes of money laundering include tax evasion, increasing profits from crime, and limited risks of exposure. Money laundering distorts economies, increases corruption and crime, undermines financial market integrity, and risks countries' reputations.
The document discusses money laundering prevention. It outlines the objectives of increasing awareness of anti-money laundering responsibilities and regulations. Non-compliance can result in penalties like imprisonment, fines, license revocation and more. Key aspects of money laundering prevention covered include know-your-customer procedures, suspicious transaction reporting, and the importance of monitoring transactions for consistency with customer profiles.
A "back to basics" presentation of the fundamental anti-money laundering laws, including the Anti-Money Laundering Act of 2020 and the Bank Secrecy Act.
Anti money laundering (aml) and financial crimeRaviPrashant5
This document provides an introduction to anti-money laundering regulations. It discusses how money laundering works, including the key stages of placement, layering and integration. The document outlines the UK Money Laundering Regulations 2017, which require certain businesses to register, implement customer due diligence processes and monitor transactions to prevent money laundering. It defines money laundering and financial crime and the offenses covered by relevant legislation. The goal of the course is to help professionals understand their responsibilities and comply with anti-money laundering laws.
This document defines money laundering and discusses how anti-money laundering (AML) laws support anti-corruption efforts. It defines money laundering as disguising illegally obtained money to make it appear legitimate. AML laws make it riskier for corrupt officials by requiring financial institutions to monitor transactions and report suspicious activity. While AML may help deter some corruption, it faces challenges such as lack of political will, high costs, and difficulties in international coordination and applying the laws in cash-based economies. Overall, AML complements but does not replace the need for broader anti-corruption programs.
International Standards & Action to Combat Money Laundering 11- Legal Aspects...LawrenceMutinda1
The document discusses international standards and legal aspects for combating money laundering. It outlines recommendations from the Financial Action Task Force (FATF) for establishing effective anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks. Key elements include creating laws criminalizing money laundering and terrorist financing, implementing customer due diligence and suspicious transaction reporting, establishing financial intelligence units, and facilitating international cooperation between agencies. Countries are assessed based on implementing 252 criteria from the FATF methodology to evaluate their compliance.
The document discusses money laundering and the global efforts to combat it through organizations like the Financial Action Task Force (FATF). It provides background on money laundering, defining it as the process of making illegally gained proceeds appear legal. It outlines the key objectives and recommendations of FATF, including establishing international anti-money laundering standards. It also summarizes India's Prevention of Money Laundering Act (PMLA) 2002, describing scheduled offenses, the roles of agencies like the Enforcement Directorate, and obligations of financial institutions to report suspicious transactions.
Anti Money Laundering Conference Cyprus - Post-Event PresentationInfocredit Group
On the 19th December, Infocredit Group, alongside KPMG and CIIM hosted the Anti-Money Laundering Conference in Cyprus
The event, which was attended by more than 200 participants from local business from the Banking, ForEx, Legal and Audit industries, included speakers from Cyprus and abroad.
OFAC Name Matching and False-Positive Reduction TechniquesCognizant
Exploration of Office of Foreign Asset Control (OFAC) compliance and strategies to avoid false positives (and negatives), covering watch lists such as specially designated nationals (SDN), customer due diligence,data mining, probabilistic techniques and anti-money-laundering (AML) software.
Financial crimes compliance and enforcement trends 2019Joseph V. Moreno
Panel presentation to the DC Bar Association on September 12, 2019, by Joseph Moreno of Cadwalader, Fabio Leonardi of Pillsbury, Stephen Gibbons of Raytheon, and Woo Lee of the U.S. Department of Justice.
Threat finance is an enabling factor of crime and terrorism, and therefore, a challenge to both national and international security. The integration of global financial systems, as well as technological innovation and proliferation, has reduced barriers to threat finance and money laundering while making it difficult for authorities to detect or disrupt these illicit operations.
The American Security Project has compiled this presentation to provide an overview of threat finance and the methods used to launder money, as well as measures aimed at countering these activities.
This document provides an overview of anti-money laundering topics including what money laundering is, how it is carried out in practice, how corporate vehicles and terrorist financing relate to money laundering, and regulations and prevention measures used to fight money laundering. Key points covered include the stages of money laundering, negative impacts of money laundering, methods used, corporate structures that enable it, differences between money laundering and terrorist financing, US and EU AML regulations, and customer due diligence and screening processes organizations use to prevent money laundering.
In this age of global business operations and opportunities, it is a business imperative to have an effective FCPA Compliance Program. In this webinar co-hosted with Paul Murdock of MCG Consulting we explore and discuss Foreign Corrupt Practices Act compliance and actions to achieve a FCPA Compliance Program.
For a full video of the recording visit: https://mco.mycomplianceoffice.com/mco-webinar/foreign-corrupt-practices-act-fcpa-compliance-webinar
Money laundering is the process of making illegally gained proceeds appear legitimate. It involves three steps: placement, layering, and integration. Globally, money laundering amounts to $800 billion to $2 trillion annually. It enables criminal activities like drug trafficking, corruption, and terrorism. Banks are at risk of reputational damage, legal penalties, and financial losses if they aid money laundering. International organizations like the UN and FATF promote cooperation between countries and issue recommendations to strengthen anti-money laundering practices.
“BSA/AML Considerations for Digital and Virtual Currencies”Rachel Hamilton
The document discusses regulatory considerations for digital and virtual currencies from an anti-money laundering perspective. It provides an overview of key questions for virtual currency companies regarding their regulatory obligations. It also summarizes remarks from financial regulators emphasizing the importance of virtual currency companies having controls to address money laundering risks and meet reporting obligations. The document outlines elements of an effective anti-money laundering compliance program and notes increased scrutiny of individuals at financial institutions, including directors and officers, for anti-money laundering failures.
Best Practices to Achieve an Effective FCPA Compliance ProgramMyComplianceOffice
In this age of global business, it is imperative to have an effective FCPA compliance program. In this webinar co-hosted with Paul Murdock of MCG Consulting we touched on:
-The Foreign Corrupt Practices Act compliance
-How to build an effective FCPA Compliance program
-Learn how to prepare your program to 'protect' your company
To watch video recordings of this webinar visit; https://mco.mycomplianceoffice.com/mco-webinar/best-practices-to-achieve-an-effective-fcpa-compliance-program
Skillwise Know your Customer & Money LaunderingSkillwise Group
This document discusses money laundering and prevention measures for bankers. It defines money laundering and the process of placement, layering and integration. It emphasizes the importance of customer due diligence, compliance with laws, and identifying irregular or suspicious transactions to observe rules for bankers and prevent money laundering.
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Entity Due Diligence From Corporate & UCC PerspectivesCT
How does due diligence vary between the Corporate and UCC perspective? This presentation outlines the similarities and differences between the two. Explore legal due diligence from both the audit and deal perspectives, with a focus on entity structure, contacts, KYC/AML, and timing.
Topics covered:
- Entity Structure
- Contracts
- Entity Records
- Know Your Customer/Anti-Money Laundering (KYC/AML)
- Timing
- Potential Impact Issues
Meet our expert:
Lori Ann Fox, Esq., Transactional Business Consultant
Lori Ann Fox has been with CT Corporation for over ten years as a government liaison and legal expert. In her role, she focuses primarily on the legal and regulatory issues facing CT’s customers in formation, compliance, and M&A. She sits on drafting committees and works closely with state bar associations, government offices and legislatures to implement changes in business entity and related laws. Additionally, she regularly lectures across the U.S. on topics related to business entity operations and filings, including:
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Mergers
Business Entity Formation and Maintenance
Compliance and Governance
Limited Liability Companies
Specialty/Alternative Entity Types
Ethical Considerations Surrounding Entity and Compliance Issues
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Delaware and Texas Business Entity Law Comparison Overview & Legislative UpdatesCT
Both Texas and Delaware offer many benefits for those looking to incorporate their business. However, there are significant differences between the two states’ business entity laws that should be considered before selecting one state over the other. See this presentation to learn more about these key differences, similarities and important legislative updates.
Viewers will learn about:
the importance of Delaware and Texas to the business landscape the background for each state that provides further context a comparison of business entity laws and related filing and court systems the latest legislative and policy updates for each state as they impact corporations, LLCs, and partnership statutes
Meet our expert:
Lori Ann Fox, Esq., CT Transactional Business Consultant
Lori Ann Fox has been with CT Corporation for over 10 years and currently serves as a Dallas-based Transactional Business Consultant where she directly supports client goals and strategies with her extensive knowledge, skills, and experience. Previously, she served as the Government Relations and Regional Attorney, focusing on legal and regulatory issues, and working closely with state bar associations, government offices, and legislatures to implement changes in business entity and related laws.
Ms. Fox sits on legislative drafting committees and is a contributing member for both the Texas Business Law Section’s Business Organizations Code committee and the Blockchain and Virtual Currencies Committee. She is an active committee member for the Association for Corporate Growth Dallas-Fort Worth Chapter and regularly lectures across the U.S. on topics related to business entity and due diligence laws, filings, and searches.
Prior to joining CT, Ms. Fox maintained a private practice focusing on corporate law, which was preceded by her serving as General Counsel for an insurance company. She received her law degree from Emory University School of Law and is a member of the State Bars of Texas, Oklahoma, and Georgia.
This document summarizes Alan Stachura's presentation on recent Delaware legal updates. The presentation covered: (1) key statistics on Delaware entity formations in 2018, including over 200,000 new entities formed; (2) new legislation under Senate Bills 88, 183, 89, 90, and 91 that updates requirements for corporations, LLCs, LPs, and other entities; and (3) reminders about annual reporting and franchise tax deadlines and payment amounts for corporations and other business entities.
Bianca Erb is a senior business consultant at CT Corporation who has over 13 years of experience helping clients with global expansion. Her presentation discusses key considerations for global expansion, including know-your-client (KYC) regulations and anti-money laundering compliance, business formation and dissolution processes, and ongoing regulatory updates in foreign jurisdictions. She outlines services CT provides to help clients navigate global regulations and compliance requirements as they conduct business abroad.
Learn about the critical role Independent Directors play in structured finance, credit, real estate and securitized transactions. This webinar will detail how an Independent Director serves on the board of directors for a special purpose entity to help to manage a loan and keep deals moving forward.
Topics include:
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Procedures for handling a possible Bankruptcy proceeding
How to identify a competent Independent Director
How CT can help
Presenter: Vic Duva, Director of Corporate Staffing
Global compliance professionals & entity management staying in controlCT
Organizations have benefited from strong economic growth and an increase in global deals. However, those in charge of entity management have the added burden of ensuring subsequent legal, regulatory, and contractual compliance. Alleviate risk and strengthen your control on global compliance with this complimentary webinar.
Improve decision making with expert insights into key factors such as legislative updates, anti-money laundering regulations, and transaction compliance. Plus, learn how to best leverage technology to streamline processes and ensure compliance.
Topics covered:
Keeping up with on-going local legislation changes
Risk of non-compliance with local regulation changes
Anti-money laundering regulations
Pre- and post-transaction compliance checklist
Leveraging technology to ensure global compliance
The world of due diligence is designed to be predictable and stable – but change is inevitable. This presentation reviews the changes facing modern due diligence and provides strategies to best manage these updates. CT’s expert consultant will specifically discuss changes in Delaware corporate law, due diligence recordings, case law, and cyber due diligence.
Learn About:
Changes and updates to statutory law
Cybersecurity / due diligence
UCC-3 Issues
General Motors case and terminations
Assumed Business Names - What Every Business Lawyer Should KnowCT
Businesses are frequently required to adopt – or want to adopt – a different name than the one used for formation. This assumed name, otherwise known as “doing business as”, is a popular option often accompanied by legal requirements that vary by state. In this presentation, CT’s expert attorney reviews the key aspect of assumed names so attendees are well informed about the process and how to navigate it successfully.
Learn about:
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Reasons assumed names are used
How (and why) assumed names are regulated by states
How courts have handled parties using assumed names
Penalties for non-compliance
Closing the Deal - Multiple Perspectives on Due DiligenceCT
Due diligence is the cornerstone of most successful deals. But one’s view of due diligence can change depending on perspective. In this on-demand webinar, CT’s expert staff will review due diligence from the audit and deal perspectives. Viewers will gain insights into the similarities and differences between the two, as well as an overview of issues and possible solutions.
Learn About:
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Contracts
Entity records
AML/KYC
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The Wayfair Decision & Small Businesses Selling Online - The Taxman ComethCT
In June last year the US Supreme Court ruled in South Dakota vs. Wayfair Inc. case, that states can require out-of-state retailers to collect sales taxes from in-state customers, even if the retailers have no physical presence in the state.
This was a major change for businesses small and large who conduct business online. No longer will there be the advantage of bypassing sales tax collection by selling online and not having a physical presence in a state. Rather, if a remote seller generates revenue and/or sales in a state, they may be required to collect a state sales tax.
This decision has led to many questions about what might be the impact on all remote online businesses regarding responsibilities and requirements regarding state sales tax, and if all states are requiring this new obligation.
The document discusses deal compliance requirements when executing transactions. It covers why focusing on compliance is important given the large number of deals, describes common transaction vehicles like acquisitions, mergers, and conversions, and identifies key issues to consider including ensuring all entities are in good standing, properly handling intellectual property transfers, complying with anti-money laundering laws, and paying attention to timing of the transaction. The presentation aims to help practitioners navigate deal compliance requirements.
Learn about the key trends and recent legislative updates in the nation’s most popular state to incorporate. In addition, attendees will have the opportunity to hear about pending and future legislation, as well as gain insight into changes in franchise taxes and annual reports.
Over the last few years we have seen some significant adjustments and developments in Revised Article Nine. Starting with 2013 statutory changes and now recent court cases have created a new environment that due diligence experts must adjust to in order to maintain their high levels. This one hour seminar explores some of these changes and how they impact the due diligence work flow and the relationships between the interested parties.
If it’s happening in Delaware, you want to know about it. 65% of the Fortune 500 are incorporated in Delaware, and over 150,000 new entities were formed in 2013 alone. Whether you work in a corporation or at a law firm, you’ll need to answer the questions, “Why Delaware?” and “What do I need to know to get the best results?”
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The LLC now leads as the most popular statutory business entity in the United States. If you manage business formations and compliance, chances are you’re looking at a lot of LLCs. But with only 30 years of LLC law — compared to 100+ years of corporation law — you can also be facing some uncertainty.
Whether you’re managing just a few LLCs or many, accuracy is essential. Learn the basics of LLC law from CT’s expert staff attorneys. With a solid grounding in current LLC state laws, you can confidently make better-informed decisions for forming, qualifying, and maintaining LLCs.
What do most federal and state business laws have in common? Mandatory filing requirements, with serious consequences for non-compliance. If you’re not on top of these ongoing compliance actions, you’re putting your company or clients at risk. Business can face fines, administrative dissolution, even loss of access to courts. In some circumstances, certain individuals can face criminal penalties.
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Through our tenure as the leader in business and legal compliance, CT has amassed an unsurpassed wealth of knowledge. We share this institutional expertise with you with our live seminars and webinars.
Federal diversity jurisdiction is conditioned on two requirements – the amount in controversy must exceed $75,000, and there must be “complete diversity,” meaning that no defendant may have the same “citizenship” as any plaintiff.
In this CT Corporation webinar, learn more about diversity jurisdiction with special guest Thomas E. Rutledge of Stoll Keenon Ogden PLLC. For more information, head to ct.wolterskluwer.com.
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As soon as businesses decide to merge, the respective legal teams from each entity must immediately mobilize and accurately deploy a merger plan that addresses everything from due diligence to the final filings. Any missed steps can incur serious costs or cause adverse delays.
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2. CTWolters Kluwer
• Current Lay of the Land:
– Present and future laws put Attorneys at risk of unknowingly violating Rule 1.2
Rules of Model Rules of Professional Conduct
– Background and connection between attorneys serving as business formation
professionals and unknowingly enabling money laundering terrorism and tax
evasion.
• Office of Foreign Assets Control
– What attorneys don’t know can result in fines.
– Specially Designated Nationals (SDN) list
Attorneys need to screen their clients to avoid ethics rules violations.
• Financial Crimes Enforcement Network
– Bank Secrecy Act
– Suspicions Activity Reports (SARs) and Ethical impact on Attorneys
Agenda
3. CTWolters Kluwer
• The ABA Gatekeeper Initiative – Risk Based Guidance for Legal
Professionals
• Ethical Considerations of Potential Anti-Money Laundering Requirements
for Lawyers
– Model and NY Rules of Professional Conduct
Rule 1.1 Competence
Rules 1.2, Representation,
Rule 1.4 Communication
Rule 1.6, Confidentiality
Rule 1.9 Duties to Former Client
Rule 1.16 Terminating Representation
Rule 1.18 Duties to Prospective Client
Rule 1.13 Organization as a Client,
Rule 4.1 Transactions with 3rd parties,
Rule 8.4 Attorney Misconduct
• Case Studies
Agenda (cont.)
4. CTWolters Kluwer
Agenda (cont.)
• New York City Bar Formal Opinion 2018-4
• Attorney Due Diligence of Clients
– ABA Voluntary Good Practices Guidance for Lawyers
• Case Study
5. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
No Assistance in Illegal or Fraudulent Activities
Rule 1.2(d)
• (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct
that the lawyer knows is criminal or fraudulent, but a lawyer may
discuss the legal consequences of any proposed course of conduct with a
client and may counsel or assist a client to make a good faith effort to
determine the validity, scope, meaning or application of the law.
6. CTWolters Kluwer
60 Minutes at your door
• What would you do?
How would you respond?
http://www.cbsnews.com/news/anonymous-inc-60-minutes-steve-kroft-
investigation/
7. CTWolters Kluwer
60 Minutes January, 31 2016
“The following is a script from "Anonymous, Inc." which aired on Jan. 31, 2016.
Steve Kroft is the correspondent. Graham Messick and Kevin Livelli, producers.
If you like crime dramas and movies with international intrigue, then you probably
have a basic understanding of money laundering. It's how dictators, drug dealers,
corrupt politicians, and other crooks avoid getting caught by transforming their ill-
gotten gains into assets that appear to be legitimate.
They do it by moving the dirty money through a maze of dummy corporations and
offshore bank accounts that conceal their identity and the source of the funds.
And most of it would never happen without the help -- witting or unwitting -- of
lawyers, accountants and incorporators; the people who actually create these
anonymous shell companies and help move the money. In fact, the U.S. has become
one of the most popular places in the world to do it.* * *”
8. CTWolters Kluwer
Money Laundering and Terrorist Financing
• Background
– Growing concern by federal government about money laundering and
terrorist financing.
Six Government Accountability Office (GAO) studies since 2000.
– Federal Agencies believe states have failed to supervise the formation and
operation of legal persons.
– Business Formation Agents are viewed as integral part of the money
laundering problem.
GAO reports assert registered agents shield identity of beneficial owners of
business entities.
9. CTWolters Kluwer
• In 2003, money laundering had an estimated world wide value between
$500 billion and $1 trillion dollars annually
• Money laundering provides the financing for…
– Drug dealers
– Arms traffickers
– Terrorists
– International Organized Criminal
– As well as common tax cheats
. . . to operate and to expand their activities, with significant social and
economic consequences.
Money Laundering is Serious
10. CTWolters Kluwer
“In recent years, the Financial Action Task Force (FATF) has noted increasingly
sophisticated combinations of techniques, such as the increased use of legal
persons to disguise the true ownership and control of illegal proceeds, and an
increased use of professionals to provide advice and assistance in laundering
criminal funds.”
-FATF, The Forty Recommendations, 20 June 2003, incorporating the amendments of
22 October 2004
Evolution of the Problem of Money Laundering
– in the Direction of Business Formation Agents
11. CTWolters Kluwer
• FATF was established by the G-7 Summit of Paris in July 1989 in response
to mounting concern over money laundering.
• The FATF is an inter-governmental body whose self-described purpose is
the development and promotion of policies, both at national and
international levels, to combat money laundering and terrorist financing.
The Financial Action Task Force (FATF)
on Money Laundering
12. CTWolters Kluwer
• The FATF is mandated to:
– examine money laundering techniques and trends;
– review existing national and international legislation and enforcement, and
– define further measures needed to combat money laundering.
• Prior to September 11, 2001, the FATF was primarily focused on anti-
money laundering and published the Forty Recommendations to
provide a set of counter-measures
• After September 11, FATF issued an additional Nine Special
Recommendations to address terrorist financing.
• FATF, as of February 2012, now has a revised 40 Recommendations.
The Financial Action Task Force (FATF)
on Money Laundering
13. CTWolters Kluwer
• FATF’s recommendations call for countries to:
– criminalize money laundering and enable authorities to confiscate the
proceeds of money laundering;
– implement customer due diligence programs
Require record keeping
Require suspicious transaction reporting;
– establish a financial intelligence unit to receive and disseminate
suspicious transaction reports; and,
– cooperate internationally in investigating and prosecuting money
laundering
The Financial Action Task Force (FATF)
on Money Laundering
14. CTWolters Kluwer
FATF’s Membership
• Argentina
• Australia
• Austria
• Belgium
• Brazil
• Canada
• China
• Denmark
• European Commission
• Finland
• France
• Germany
• Greece
• Gulf Co-operation Council
• Hong Kong, China
• Iceland
• India
• Ireland
• Italy
• Japan
• Luxembourg
• Mexico
• Kingdom of the Netherlands
• New Zealand
• Norway
• Portugal
• Russian Federation
• Singapore
• South Africa
• South Korea
• Spain
• Sweden
• Switzerland
• Turkey
• United Kingdom
• United States
15. CTWolters Kluwer
Why Be Concerned by FATF?
Because FATF is successful:
• FATF 40 already incorporated into U.S. Bank Secrecy Act via USA Patriot ACT for
financial institutions.
• FATF 40 recommendations already accepted as international norms.
• FATF has initiated a movement to extend national anti-money laundering programs
beyond the financial sector.
16. CTWolters Kluwer
US Failed the Mutual Evaluation in 2016
• Recommendation 22 – Designated Non-Finantial Businesses and
Professionals (DNFBPs): Customer due diligence
– Attorney should conduct client due diligence to avoid doing business with
money launderers
– Non-compliant
• Recommendation 23, DNFBP Other Measures.
– Duty to Report Suspicious Activities to Law Enforcement
– Non-compliant
• Recommendation 24, Transparency and Beneficial Ownership of Legal
Persons.
– Access by authorized persons to beneficial ownership and control
persons of legal persons
– Non-compliant
17. CTWolters Kluwer
The US Anti-Money Laundering Charge Is Lead by:
• House Task Force to Investigate Terrorism Financing
• Sen Whitehouse (RI), Rep Maloney (NY)
• Requests GAO Reports
• Financial Action Task Force on Money Laundering (FATF)
• Financial Crimes Enforcement Network (FinCEN)
• Federal Money Laundering Threat Assessment Working Group
– Dept. of Treasury
– Dept. of Justice
Federal Bureau of Investigation (FB)
Drug Enforcement Administration (DEA)
– Dept. . of Homeland Security
18. CTWolters Kluwer
2006 GAO Report Finds Abuses of
Shell Companies Promote Money Laundering
• States do not uniformly collect common data elements on all companies
they form. These data elements are:
– The purpose of the company
– The address of the company’s principle office
– The name of the company’s agent for service of process.
– The physical address of the company’s agent for service of process
– The number and type of shares/ownership interests for all types of
companies.
– The signature and address of the incorporators/organizers.
– The names and addresses of all officers
– The names and addresses of all directors/managers/managing members.
– The name and addresses of all beneficial owners
19. CTWolters Kluwer
The Development of Legislation
and Related Activities
• 2005 Anti-Money Laundering Task force identifies deficiencies with DE, WY
and NV
– Law Enforcement perceives the following as Deficiencies
– Minimal annual fees
– One-person company is allowed
– No annual report is required until the anniversary of the incorporation date.
– Unlimited stock is allowed, of any par value
– Bearer stock can be used
– Nominee shareholders are allowed
– Share certificates are not required
– Minimal initial filing fees
– No minimum capital requirements
– Doesn't collect corporate income tax information to share with the IRS
20. CTWolters Kluwer
Anti-Money Laundering Task Force
• Meetings may be held anywhere
• Officers, directors, employees and agents are statutorily indemnified
• Continuance procedure (allows Wyoming to adopt a company formed in
another state)
• Stockholders are not revealed to the State.
– Law enforcement’s ultimate goal is transparency, exposing the links
between the legal person and those persons who control, own, or benefit
from the activities of a legal person.
21. CTWolters Kluwer
Timeline Activities
• 2006 June. Delaware passes increased regulation of RA and requires
maintaining the business entity to provide a contact person to RA.
22. CTWolters Kluwer
Timeline (cont.)
• July 2007 - NASS Task force report makes recommendation
• The NASS task force recommended that the ABA and NCCUSL amend all of
the model and uniform entity laws to:
– require that every form of entity keep a list of its record owners
– file a periodic report with the Secretary of State in the jurisdiction of
organization that identifies by name and address an individual with access to the
list of record owners
• 2008 May. Sen. Levin, Sen. Obama introduce S 2956 “Incorporation
Transparency and Law Enforcement Assistance Act. Would have:
– Placed business formation agents (attorneys) uof beneficial owners of business
entities and make available to law enforcementnder BSA
– Required Secretary of State Offices to maintain list
23. CTWolters Kluwer
• 2008 August. ABA Gatekeepers task force proposes and House of
Delegates adopts “Resolution 300” in opposition to S 2956. The
resolution recommends attorneys promote risk based assessment of
clients to prevent unknowingly promote money laundering.
• 2009 July NCCUSL adopts the Uniform Law Enforcement Access to Entity
Information Act ULEAEIA
– Act not recommended for adoption pending federal legislative actions
• 2010 August, HR 6098 introduced. Sponsored by Rep Maloney, Rep.
Frank
• July 2014 ….Proposed New Rules for customer due diligence for
financial institutions
– Oct 126 responses to the proposed rules
– Reissues requests for response Dec. 2015
Timeline (cont.)
24. CTWolters Kluwer
Timeline (cont.)
• Delaware Aug. 2014: New record keeping requirements and
communications contact person access to records for LLCs and LPs.
– Sections 18-305 and 18-104 (LLCs) and Sections 17-305 and 17-104 (LPs) and
now require that LLCs and LPs keep updated records of names and last known
business, residence, or mailing address of each member and manager.
Additionally, the LLC’s “communications contact” (liaison between [LLC or LP]
and registered agent) must have access to these updated records.
• 2015. S 174 Sen. Whitehouse. (Son of Levin Legislation)
• Feb 2016. HR 3331 Incorporation Transparency and Law Enforcement
Assistance Act Rep. Malone, King
• Feb. 2016. S 2489 Whitehouse (companion bill)
• July 2016 S 2368 Carper
25. CTWolters Kluwer
• S 1454. Sen. Whitehouse, Grassley, Feinstein. “True Incorporation
Transparency for Law Enforcement Act”
– Requires disclosure of beneficial ownership.
• HR 3089 Rep. Maloney, King Corporate Transparency Act of 2017
• OR 2191
– Grant Sec of State investigative powers
– Make Officers Director liable for fraudulent activities of shell company
– Requires RA to have a location and not a virtual office or mail forwarding service
– Involuntary dissolution for illegal or fraudulent activates.
• DE HB 404
– Requires Registered Agents to conduct customer CDD before filing documents for
a new customer
Identification and SDN Check
– Must periodically review clients against SDN list
Timeline (cont.)
26. CTWolters Kluwer
Timeline (cont.)
• 2019 DC Ordinance requires the disclosure of BO with 10% interest or
more.
• 2019 H.R. 2513: Corporate Transparency Act of 2019, Maloney
– Requires corporations and limited liability companies disclose their true, beneficial owners to FinCEN
at the time the company is formed.
– Establishes minimum beneficial ownership disclosure requirements: must provide beneficial owners’
name, date of birth, current address, and driver’s license or non-expired passport number.
– Requires companies to file annually with FinCEN a list of its current beneficial owners, as well as a list
of any changes in beneficial ownership that occurred during the previous year.
– Provides civil and criminal penalties for persons who willfully submit false or fraudulent beneficial
ownership information, or who knowingly fail to provide complete or updated beneficial ownership
information
– Beneficial ownership information collected by Treasury or the states will only be available to: (1) law
enforcement (upon request); and (2) financial institutions, with customer consent, for purposes of
complying with their “Know Your Customer” requirements under Anti-Money Laundering law.
• S. 1978 (IS) - Corporate Transparency Act of 2019, Sen. Whitehouse,
Rubio, Wyden
27. CTWolters Kluwer
Timeline (cont.)
Proposed Legislation: Sen. Cotton, Warner, Jones, Rounds
• Creates BO registration
ABA Resolution 119
• constitutional rights and legitimate confidentiality interests must be protected;
• appropriate due process must be provided;
• the collection, maintenance, and verification of applicable beneficial ownership or record ownership
information must be an obligation of the entity;
• any definition of and reporting threshold for beneficial ownership must be clear, reasonable, and not
unduly burdensome;
• information concerning an entity’s records contact individual, and concerning the entity’s beneficial
ownership or record ownership or both, as applicable, should only be available to:
– (i)law enforcement agencies promptly, but only in response to a valid subpoena, summons, or warrant; and
– (ii)financial institutions, but only with the consent of the entity and subject to confidentiality protections when appropriate;
• all types of business entity structures, including corporations and limited liability companies, should
generally be subject to the same requirements, with appropriate exemptions or variations to recognize
differences in entity forms, risk levels, existing regulatory obligations, or other factors;
• any penalties for noncompliance must be calibrated to reflect the nature and degree of the
noncompliance; and
• any new requirements must not undermine the attorney-client privilege, the confidentiality of lawyer-
client communications, or the confidential lawyer-client relationship.
28. CTWolters Kluwer
This Got Our Attention
All organizations involved in the corporate registration process need to understand
OFAC regulations. Undertaking any type of business or financial transaction with a
sanctions target is illegal under federal law and the industry can make an important
contribution to the achievement of national security goals by identifying sanctioned
targets in order to block their ability to use the U.S. financial system or do business in
the United States.
29. CTWolters Kluwer
OFAC Sanctions programs are strict liability and apply to:
• U.S. persons, wherever located;
• Persons within the United States;
• U.S. origin goods, technology or services wherever located
30. CTWolters Kluwer
Types of Sanctions Programs
Jurisdictional,
(1) Jurisdictional sanctions impose restrictions on a particular geography
or location; for example, U.S. Persons are prohibited to export goods
to Iran.
List-based,
(1) List-based sanctions prohibit U.S. Persons from engaging in any
transactions (directly or indirectly) where there is an interest in
property of a sanctioned party identified on the SDN List.
Sectoral
(1) sectoral sanctions programs target an individual, entity, or industry
sector -- but only for certain types of activities.
(1) For example, Crimea do not restrict U.S. Persons from all dealings with
listed parties –
31. CTWolters Kluwer
OFAC sanctions:
• Country-based
– Cuba
– Iran
– Sudan
– Syria
– North Korea
• List-based
– Terrorists and their supporters
– Narcotics traffickers and their supporters
– Persons engaged in the proliferation of weapons of mass
destruction
– Government officials who suppress democracy
Types of Sanctions Programs
32. CTWolters Kluwer
Sanctional Lists
• Consolidated Sanctions List
– Foreign Sanctions Evaders (FSE) List
– Sectoral Sanctions Identifications (SSI) List
– Palestinian Legislative Council (NS-PLC) list
– The List of Foreign Financial Institutions Subject to Part 561 (the Part 561 List)
– Non-SDN Iranian Sanctions Act (NS-ISA) List
– List of Persons Identified as Blocked Solely Pursuant to Executive Order 13599
(the 13599 List)
32
33. CTWolters Kluwer
OFAC’s prohibitions are broad and include:
Imports of goods, technology or services
Exports of goods, technology or services
Attempts to facilitate any of the above
Importantly, OFAC’s sanctions programs – whether country-, sectoral-, or
list-based, also utilize the 50 percent rule (or “Shadow SDN” rule). This
concept holds that any entity owned 50 percent or more by a prohibited
party is also a prohibited entity – even though that “shadow” entity may
not appear on the SDN or SSI lists.
Prohibited Activity
34. CTWolters Kluwer
Specially Designated Nationals List (SDN)
• ALPHABETICAL LISTING OF SPECIALLY DESIGNATED NATIONALS AND BLOCKED PERSONS
("SDN List"): This publication of Treasury's Office of Foreign Assets Control ("OFAC") is
designed as a reference tool providing actual notice of actions by OFAC with respect to
Specially Designated Nationals and other persons (which term includes both individuals and
entities) whose property is blocked, to assist the public in complying with the various
sanctions programs administered by OFAC. The latest changes to the SDN List may appear
here prior to their publication in the Federal Register, and it is intended that users rely on
changes indicated in this document. Such changes reflect official actions of OFAC, and will be
reflected as soon as practicable in the Federal Register under the index heading "Foreign
Assets Control." New Federal Register notices with regard to Specially Designated Nationals
or blocked persons may be published at any time. Users are advised to check the Federal
Register and this electronic publication routinely for additional names or other changes to
the SDN List. 3MG (a.k.a. MIZAN MACHINE MANUFACTURING GROUP), P.O. Box 16595-365,
Tehran, Iran [NPWMD] 7TH OF TIR (a.k.a. 7TH OF TIR COMPLEX; a.k.a. 7TH OF TIR
INDUSTRIAL COMPLEX; a.k.a. 7TH OF TIR INDUSTRIES; a.k.a. 7TH OF TIR INDUSTRIES OF
ISFAHAN/ESFAHAN; a.k.a. MOJTAMAE SANATE HAFTOME TIR; a.k.a. SANAYE HAFTOME TIR;
a.k.a. SEVENTH OF TIR), P.O. Box 81465-478, Isfahan, Iran; Mobarakeh Road Km 45, Isfahan,
Iran [NPWMD] 7TH OF TIR COMPLEX (a.k.a. 7TH OF TIR; a.k.a. 7TH OF TIR INDUSTRIAL
COMPLEX; a.k.a. 7TH OF TIR INDUSTRIES; a.k.a. 7TH OF TIR INDUSTRIES OF
ISFAHAN/ESFAHAN; a.k.a. MOJTAMAE SANATE HAFTOME TIR; a.k.a.
37. CTWolters Kluwer
OFAC Penalties
• Civil fines up to $302,000 (indexed to inflation) or twice the value of the
transaction, whichever is greater.
• Civil penalties can accrue even if a U.S. person has no knowledge of the
violation.
• Criminal provisions cover persons who willfully commit, attempt to
commit, conspire to commit, or aid or abet in the commission of an
IEEPA-related violation.
• U.S. persons that willfully violate sanctions regulations now face
potential criminal fines of up to $1 million and up to twenty years in
prison.
38. CTWolters Kluwer
Sanctions Enforcement Guidelines
• Sanctions Enforcement Guidelines
– OFAC published “holistic” guidelines on September 8, 2008
– Establish the “egregious v. non-egregious case” distinction
– Provides a set of 11 factors on which to determine the appropriate
enforcement action
Appears to eliminates the risk-based compliance model of the 2006 Banking
Procedures
Reduces likelihood of mitigation for a “voluntary disclosure”
– New matrix for establishing a base civil penalty
– New procedures for issuing pre-penalty notices
39. CTWolters Kluwer
Base Penalty Matrix
EGREGIOUS CASE
(1)
One-half of
Transaction Value
(capped at $151,292 per
violation/$32,500 per
TWEA violation)
(2)
Applicable
Schedule Amount
(capped at $302,584 per
violation/$65,000 per
TWEA violation)
(3)
One-half of
Applicable
Statutory Maximum
(4)
Applicable
Statutory Maximum
VOLUNTARY
SELF-DISCLOSURE
Yes
YesNo
No
40. CTWolters Kluwer
Trends in Enforcement Actions
• What are the sources of information for OFAC enforcement actions?
– Routine Voluntary self-disclosures
– Blocking reports
– 31 C.F.R Section 501.602s Subpoenas
– 31 C.F.R. Section 501.603 Blocked Property Reports
– Whistleblowers
– Continued cooperation with bank regulators
– Memoranda of understanding
• Decentralization of prosecution
– New Enforcement Guidelines do not apply to DOJ
– There are 94 judicial districts
– An OFAC enforcement action can be a predicate for a money laundering
offense; we are also seeing sanctions cases giving rise to FCPA cases and
export controls cases
41. CTWolters Kluwer
Voluntary Self-Disclosures
• Voluntary self-disclosure substantially reduces the penalties OFAC will
impose
• “Voluntary self-disclosure” is a self-initiated notification to OFAC of an
apparent violation before any U.S. government agency learns of the
possible violation
• Notification does not constitute self-disclosure if a third party is required
to and does notify OFAC of the violation
– A report to OFAC by a U.S. correspondent bank of a blocked or rejected
transaction would prevent self-disclosure of that transaction, even if the
report is filed after the entity informed OFAC of the apparent violation
– Voluntary self-disclosure is possible if the third party did not report the
apparent violation to OFAC
• Disclosure must be on behalf of the entity, so that reports by whistle
blowers are not self-disclosure
42. CTWolters Kluwer
Voluntary Self-Disclosure (cont.)
• The benefits of voluntary self-disclosure may be largely illusory,
however
• If a transaction passes through the U.S. financial system, it may be
difficult to voluntarily self-disclose, because the U.S. correspondent
bank will report blocked or rejected transactions
– Even if you notify OFAC before the bank reports the transaction, it will not
count as self-disclosure
43. CTWolters Kluwer
Failure to Maintain Records
• Failure to maintain records in adequate manner: $50,000
– OFAC need not find a violation
– This penalty can be applied in addition to any penalty for a violation
• We are concerned that application of this penalty could become automatic
in any case OFAC finds a violation
– One of the charges against the U.K. bank was that, by altering SWIFT
messages, it prevented U.S. banks from maintaining accurate records
• This penalty effectively requires all parties to have a compliance program
44. CTWolters Kluwer
Current Focus: North Korea, Iran, & Syria
• OFAC and DOJ are making enforcement of Iran sanctions a priority
• Department of Commerce (DOC) is also increasing scrutiny of U.S.
exports to Iran
– DOC licenses and administers U.S. exports
• Cooperation between OFAC and DOC has been limited, but is increasing
45. CTWolters Kluwer
Iran Legislation – HR 1905, Pub.L. 112-158. (2012)
Expand sanctions against Iran (again) targeting anyone who:
• works in Iran's petroleum, petrochemical, or natural gas sector;
• provides goods, services, infrastructure, or technology to Iran's oil and natural gas sector, including financial
services, consulting, and maintenance & repair;
• conducts oil-for-gold or other swap transactions with Iran; insures or re-insures investments in Iran's oil
sector;
• engages in joint ventures with the National Iranian Oil Company (NIOC);
• provides insurance or re-insurance to the National Iranian Oil Company or the National Iranian Tanker
Company (NITC);
• helps Iran evade oil sanctions through reflagging, etc;
• sells, leases, or otherwise provides oil tankers to Iran, unless from a country that is significantly reducing its
oil purchases;
• transports crude oil from Iran, concealing the origin of Iranian crude;
• transports refined petroleum products to Iran; sanctioned vessels could be prevented from landing at a port
in the U.S. for up to two years;
• provides special financial messaging services to designated Iranian banks, or those who enable such activity;
• engages in uranium mining with Iran anywhere in the world.
46. CTWolters Kluwer
Russian Sanctions Legislation
• H.R.3364 - Countering America's Adversaries Through Sanctions Act
(Enacted Aug 2017)
• This bill directs the President to impose sanctions against:
– Iran's ballistic missile or weapons of mass destruction programs,
– the sale or transfer to Iran of military equipment or the provision of related
technical or financial assistance, and
– Iran's Islamic Revolutionary Guard Corps and affiliated foreign persons.
• Continues Russian Sanctions
47. CTWolters Kluwer
• Established in 1990 to support law enforcement agencies by collecting,
analyzing, and coordinating financial intelligence information to combat
money laundering
• In 1994, expanded to administer the Bank Secrecy Act
• The BSA was amended by the USA PATRIOT Act in 2001
• Is the U.S. Financial Intelligence Unit
48. CTWolters Kluwer
• Apply to Financial Institutions
– Banks, credit unions and thrifts
– Brokers or dealers in securities
– Certain insurance companies
– Money services businesses
– Casinos and card clubs
– Dealers in precious metals, stones or jewels
The Bank Secrecy Act Regulations
49. CTWolters Kluwer
• Risk-based Anti-Money Laundering (AML) Program
– Written policies, procedures, and internal controls that are based on the
results of the risk assessment
– A compliance officer responsible for ensuring that the AML program is
effectively implemented, the program is updated when necessary, and
that the appropriate persons are trained
– Ongoing training of appropriate persons
– Independent testing on a periodic basis to monitor and maintain the
program
• Suspicious Activity Reporting (in some cases)
The BSA Regulations Require
50. CTWolters Kluwer
• Identify the customer and verify the customer’s identity
• Confirm that the customer is not fronting for another person or entity
• Identify the nature of the business relationship
• Confirm that the relationship reflects the company’s knowledge of the
customer’s activities and needs
• Create a risk profile that includes:
− Basic information on the customer
− The customer’s geographical location
− The geographical sphere of the customer’s activities
− The nature of the customer’s activities
− The customer’s method of payment
“Know Your Customer” & Risk Profiles
51. CTWolters Kluwer
• Risk assessment determines the extent to which a financial institution
is vulnerable to exploitation by:
− Money launderers
− Terrorist financiers
− Persons seeking to evade economic sanctions
• A risk assessment includes a comprehensive evaluation of the level of
risk for a company’s:
− Products
− Services
− Customers
− Geographic locations
• For each category, the assessment will determine whether the
company is exposed to low, moderate, or high risk
Risk Assessment
52. CTWolters Kluwer
• Section 352 of the USA PATRIOT Act requires that financial
institutions establish AML programs.
• Financial institutions includes “persons involved in real estate
closings and settlements
• FinCEN’s proposed rule solicited assistance from the private sector to
craft the AML Program Rule:
– What are the Money Laundering Risks in Real Estate Closing and
Settlements?
– How should Persons Involved in Real Estate Closings and Settlements be
Defined?
– Should any persons involved in real estate closings or settlements be
exempted from coverage under Section 352?
– How should AML program requirements for persons involved in real
estate closing and settlements be structured?
2003 Proposed Rule: AML Program Requirements for
Persons Involved in Real Estate Closings and Settlements
53. CTWolters Kluwer
• 52 Comments
• Result: Final Rule Never Published
• Implications for the future
− The Stop Tax Haven Abuse Act would amend the BSA Regulations to
include persons involved in corporate formation process.
− Final Rule published within 180 days
Public Response
54. CTWolters Kluwer
FinCEN Geographic Order, May 2019
• Geographic Targeting Orders” Require Identification for High End Cash
Buyers of Real Estate (300K or more)
– Escrow companies must identify individuals behind entities making all cash
purchases of high end real estate.
1. The Texas counties of Bexar, Tarrant, or Dallas; 2. The Florida counties of Miami-Dade, Broward, or
Palm Beach; Geographic Targeting Order Covering TITLE INSURANCE COMPANY May 14, 2019 2 3. The
Boroughs of Brooklyn, Queens, Bronx, Staten Island, or Manhattan in New York City, New York; 4. The
California counties of San Diego, Los Angeles, San Francisco, San Mateo, or Santa Clara; 5. The City and
County of Honolulu in Hawaii; 6. The Nevada county of Clark; 7. The Washington county of King; 8. The
Massachusetts counties of Suffolk, or Middlesex; or 9. The Illinois county of Cook;
• Program is spreading to other parts of the country
• Sen. Graham included it in S 3366
55. CTWolters Kluwer
New Beneficial Ownership
Info Requirements for Banks
• (b) Identification and Verification. With respect to legal entity customers,
the covered financial institution’s customer due diligence procedures
should enable the institution to:
– (1) Identify the beneficial owner(s) of each legal entity customer, unless
otherwise exempt pursuant to §1010.230(d). * * *
• (2) Verify the identity of each beneficial owner identified to the covered
financial institution, according to risk-based procedures to the extent
reasonable and practicable.
56. CTWolters Kluwer
New Rules for Financial Institutions
• (c) Beneficial Owner. For purposes of this section, Beneficial Owner
means each of the following:
• (1) Each individual, if any, who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, owns 25% or
more of the equity interests of a legal entity customer;
• (2) A single individual with significant responsibility to control, manage, a
legal entity customer, including
– (i) An executive officer or senior manager (e.g., a Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, Managing Member, General Partner,
President, Vice President, or Treasurer); or
– (ii) Any other individual who regularly performs similar functions.
57. CTWolters Kluwer
New IRS Rule, T.D. 9796 for
Foreign Disregarded Entities
• Domestic disregarded entities wholly owned by foreign persons are now
subject to new reporting obligations.
• T.D. 9796) treats such entities as domestic corporations rather than as
disregarded entities for purposes of the reporting requirements under
Sec. 6038A. Eft. Jan. 1, 2017, and ending on or after Dec. 13, 2017.
• Foreign owned domestic disregarded entities must obtain (EIN) and file
Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation
or a Foreign Corporation Engaged in a U.S. Trade or Business
58. CTWolters Kluwer
The Gatekeeper Initiative
• Originates from the Moscow Communiqué issued at the 1999 G-8
Finance Ministers
• Calls upon countries to consider various means to address money
laundering through the efforts of professional gatekeepers of the
international financial system including lawyers, accountants, company
formation agents and others
• Following the Moscow Communiqué, FATF created a working group that
has identified several professions as “gatekeepers” with respect to
money laundering
• Within the U.S., an inter-agency working group was established to
develop a U.S. position on the Gatekeeper Imitative. It includes the
Departments of Justice and Treasury, the SEC and FinCEN
59. CTWolters Kluwer
The Gatekeeper Task Force
• The ABA created the Gatekeeper Task Force in 2002 to address the
Gatekeeper Initiative
• Mission: to respond to initiatives by the USG task force and others that will
impact on the attorney-client relationship in the context of AML
enforcement
• Reviews ABA policies/procedures
• Develops educational programs for legal professionals and law students
• Prepared Risk-Based Guidance for Lawyers
• ABA Ethics Committee endorsed Voluntary Good Practices
60. CTWolters Kluwer
FATF’s Risk-Based Guidance for Legal Professionals
• Based on the “40+”, FATF issues Risk-Based Guidance for “gatekeepers”
• Published on October 23, 2008
• 125 paragraph “high-level” document addressing private and public sector
• Outlines the risk factors lawyers must consider when developing a risk-
based compliance system
• It does not take into account practical realities of the practice of law; nor
does it address jurisdictional variations among FATF member countries
61. CTWolters Kluwer
Federal Legislation
• Proposal places Business Formation Agents under the BSA
• Exclusions for:
– Attorneys
– Government (filing) offices
62. CTWolters Kluwer
Uniform Law Enforcement Access to Entity
Information Act - Formerly Known as ROBA
• Cradle to grave requirement for entity record retention of management and
ownership records and operational agreements.
• Creates New filing requirements for ALL privately held business entities
with 50 or fewer shareholders/members.
– Exclusion also applies for regulated entities i.e. banks insurance co. etc.
• Entity must designate a “Records Contact” who has access to the entity
records and can deliver them to law enforcement upon an “appropriate
request”
• Entity must designate a “Responsible Individual” who
– “Directly or indirectly, participates in the control or management of an
entity or, in the case of an entity being formed, will participate in the
control or management of the entity.”
63. CTWolters Kluwer
Unintended Consequences of
Incorporation Transparency Act or ULEAEIA
• May have a chilling effect on filing and increase costs of filing and
maintaining records
• May cause entities to organize and file in foreign jurisdiction instead of in
the US
• A World bank study concludes that barriers to the formation of business
entities impedes economic development
• May cause the “die off” of entities failing to comply, after the transition
into the new requirements.
64. CTWolters Kluwer
Ethical Issues for Attorneys
• Does this act create possible liabilities of attorneys acting as business
formation agents and thereby create conflicts between the attorney
and his or her client?
– Given the increased liability for false information in entity formation
documents it is necessary for attorneys to conduct greater due diligence
on their clients before performing the services?
• Are attorneys potentially in violation of rule 1.6 if they serve as a
records contact/documentation agent or a responsible individual?
– Should attorneys obtain a client waiver before serving in that capacity,
even just for the purpose of assisting and organizing the entity?
• Should attorneys serve as responsible individuals on behalf of
corporations they work for or entities that hire them?
– The RI is the person who answers questions from law enforcement?
65. CTWolters Kluwer
Ethical Issues for Attorneys (cont.)
• What happens if an attorney serves as a Records Contact/Documentation
Agent and knows the records received from the entity are not correct?
– Is resignation good enough?
– Can that attorney continue with an attorney-client relationship?
• If S 1465 passes should attorneys as formation agents vet foreign
ownership interests in business entities?
• What are the ethical consequences of Attorneys regulated under the BSA?
66. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
No Assistance in Illegal or Fraudulent Activities
Rule 1.2(d)
• (d) A lawyer shall not counsel a client to engage, or assist a client, in
conduct that the lawyer knows is criminal or fraudulent, but a
lawyer may discuss the legal consequences of any proposed course of
conduct with a client and may counsel or assist a client to make a good
faith effort to determine the validity, scope, meaning or application of
the law.
67. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 1.4(5) Communication
1.4 (a) A lawyer shall:
• (5) consult with the client about any relevant limitation on the
lawyer’s conduct when the lawyer knows that the client expects
assistance not permitted by the Rules of Professional Conduct or
other law.
NY Rules Same
68. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Model Rule 1.6 Confidentiality
Client-Lawyer Relationship
Rule 1.6 Confidentiality Of Information
• (a) A lawyer shall not reveal information relating to the representation of a client
unless the client gives informed consent, the disclosure is impliedly authorized in
order to carry out the representation or the disclosure is permitted by paragraph (b).
• (b) A lawyer may reveal information relating to the representation of a client to the
extent the lawyer reasonably believes necessary:
– (1) to prevent reasonably certain death or substantial bodily harm;
– (2) to prevent the client from committing a crime or fraud that is reasonably certain to
result in substantial injury to the financial interests or property of another and in
furtherance of which the client has used or is using the lawyer's services;
– (3) to prevent, mitigate or rectify substantial injury to the financial interests or property of
another that is reasonably certain to result or has resulted from the client's commission of
a crime or fraud in furtherance of which the client has used the lawyer's services;
– (4) to secure legal advice about the lawyer's compliance with these Rules;
– (5) to establish a claim or defense on behalf of the lawyer in a controversy between the
lawyer and the client, to establish a defense to a criminal charge or civil claim against the
lawyer based upon conduct in which the client was involved, or to respond to allegations
in any proceeding concerning the lawyer's representation of the client; or
– (6) to comply with other law or a court order.
69. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 1.9 Duties to Former Clients
1.9 Duties to Former Clients
• (c) A lawyer who has formerly represented a client in a matter or whose present
or former firm has formerly represented a client in a matter shall not thereafter:
(1) use information relating to the representation to the disadvantage of the
former client except as these Rules would permit or require with respect to a
client, or when the information has become generally known; or(2) reveal
information relating to the representation except as these Rules would permit
or require with respect to a client.
NY Rules Very Similar
70. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 1.18 Duties to Prospective Client
Rule 1.18 Duties to Prospective Client
• (a) A person who discusses with a lawyer the possibility of forming a client-lawyer
relationship with respect to a matter is a prospective client.
• (b) Even when no client-lawyer relationship ensues, a lawyer who has had
discussions with a prospective client shall not use or reveal information learned in
the consultation, except as Rule 1.9 would permit with respect to information of a
former client.
NY Rule Same
71. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Model Rule 1.13 Organization as a Client
Client-Lawyer Relationship
Rule 1.13 Organization As Client
• (a) A lawyer employed or retained by an organization represents the organization
acting through its duly authorized constituents.
• (b) If a lawyer for an organization knows that an officer, employee or other person
associated with the organization is engaged in action, intends to act or refuses to
act in a matter related to the representation that is a violation of a legal obligation
to the organization, or a violation of law that reasonably might be imputed to the
organization, and that is likely to result in substantial injury to the organization,
then the lawyer shall proceed as is reasonably necessary in the best interest of
the organization. Unless the lawyer reasonably believes that it is not necessary in
the best interest of the organization to do so, the lawyer shall refer the matter to
higher authority in the organization, including, if warranted by the circumstances
to the highest authority that can act on behalf of the organization as determined
by applicable law.
72. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Model Rule 1.13 (cont.)
• (c) Except as provided in paragraph (d), if
– (1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization
insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law,
and
– (2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization,
– then the lawyer may reveal information relating to the representation whether or not Rule 1.6
permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to
prevent substantial injury to the organization.
• (d) Paragraph (c) shall not apply with respect to information relating to a lawyer's representation of an
organization to investigate an alleged violation of law, or to defend the organization or an officer,
employee or other constituent associated with the organization against a claim arising out of an alleged
violation of law.
• (e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer's actions
taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the
lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes
necessary to assure that the organization's highest authority is informed of the lawyer's discharge or
withdrawal.
• (f) In dealing with an organization's directors, officers, employees, members, shareholders or other
constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should
know that the organization's interests are adverse to those of the constituents with whom the lawyer is
dealing.
• (g) A lawyer representing an organization may also represent any of its directors, officers, employees,
members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization's
consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate
official of the organization other than the individual who is to be represented, or by the shareholders.
73. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 1.16 Declining or Terminating Representation
• (a) Except as stated in paragraph (c), a lawyer shall not represent a client
or, where representation has commenced, shall withdraw from the
representation of a client if:
– (1) the representation will result in violation of the Rules of Professional
Conduct or other law;
– (2) the lawyer’s physical or mental condition materially impairs the lawyer’s
ability to represent the client; or
– (3) the lawyer is discharged.
74. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 1.16 (cont.)
• (b) Except as stated in paragraph (c), a lawyer may withdraw from representing a
client if:
– (1) withdrawal can be accomplished without material adverse effect on the interests of
the client;
– (2) the client persists in a course of action involving the lawyer’s services that the
lawyer reasonably believes is criminal or fraudulent;
– (3) the client has used the lawyer’s services to perpetrate a crime or fraud;
– (4) the client insists upon taking action that the lawyer considers repugnant or with
which the lawyer has a fundamental disagreement;
– (5) the client fails substantially to fulfill an obligation to the lawyer regarding the
lawyer’s services and has been given reasonable warning that the lawyer will withdraw
unless the obligation is fulfilled;
– (6) the representation will result in an unreasonable financial burden on the lawyer or
has been rendered unreasonably difficult by the client; or
– (7) other good cause for withdrawal exists.
75. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 4.1: Statements to Others
Rule 4.1 Truthfulness In Statements To Others
• In the course of representing a client a lawyer shall not knowingly:
• (a) make a false statement of material fact or law to a third person; or
• (b) fail to disclose a material fact to a third person when disclosure is
necessary to avoid assisting a criminal or fraudulent act by a client, unless
disclosure is prohibited by Rule 1.6.
76. CTWolters Kluwer
MODEL RULES OF PROFESSIONAL CONDUCT
Rule 8.4 Misconduct
Rule 8.4 Misconduct
• It is professional misconduct for a lawyer to:
– (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or
induce another to do so, or do so through the acts of another;
– (b) commit a criminal act that reflects adversely on the lawyer's honesty,
trustworthiness or fitness as a lawyer in other respects;
– (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;
– (d) engage in conduct that is prejudicial to the administration of justice;
– (e) state or imply an ability to influence improperly a government agency or official or
to achieve results by means that violate the Rules of Professional Conduct or other law;
or
– (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable
rules of judicial conduct or other law.
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New York City Bar Formal Opinion 2018-4
• Duties When an Attorney Is Asked to Assist in a Suspicious Transaction
• QUESTION: When an individual client asks a lawyer to provide legal
assistance in a transaction, and the lawyer suspects that the legal services
may assist the client’s crime or fraud, to what extent must the lawyer
investigate to allay or confirm the suspicions, and what other conduct
must the lawyer undertake under the Rules? 1
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NYCB Formal Opinion 2018-4 (cont.)
• A lawyer represents a client in the sale of a business in New York. The
client advises the lawyer that the proceeds of the transaction will be used
to purchase a different business. The client directs that after the first
transaction closes, all payments be sent to a bank in a well-known secrecy
jurisdiction. The client then asks the lawyer to proceed with the purchase.
In preparing the documents and doing general due diligence, the lawyer
realizes that the proposed purchase price is much more than the business
is worth. The lawyer also learns inadvertently that the client has two
passports, each from a secrecy jurisdiction different than the one in which
the bank is located. The lawyer suspects, but does not know, that the
transaction will involve a fraud or crime, such as money laundering or tax
evasion, on the part of the client.
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NYCB 2018-4 Conclusion
Conclusion: When asked to represent a client in a transaction that a
lawyer believes to be suspicious, the lawyer has an implicit duty under
some circumstances to inquire into the client’s conduct. If the lawyer
believes that her client is entering into a transaction that is illegal or
fraudulent, the lawyer ordinarily must attempt to inquire in order to
provide competent representation to the client under Rule 1.1. Further,
under Rule 1.2(d), which forbids knowingly assisting a client’s illegal or
fraudulent conduct, a lawyer has the requisite knowledge if the lawyer is
aware of serious questions about the legality of the transaction and
renders assistance without considering readily available facts that would
have confirmed the wrongfulness of the transaction.
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NYCB 2018-4 Conclusion (cont.)
• Implicit in the rule, therefore, is the obligation to take reasonably
available measures to ascertain whether the client’s transaction is illegal
or fraudulent. The lawyer’s inquiry must be consistent with the
confidentiality duty of Rule 1.6, which governs disclosures the lawyer may
make to third parties during the inquiry, as well as with the duty to keep
the client informed during the representation. If the lawyer concludes
that the client’s conduct is illegal or fraudulent, the lawyer must not
further assist the wrongdoing and may undertake remedial measures to
the extent permitted by the exceptions to the confidentiality rule.
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Client Due Diligence: ABA Good Practices
• Client Intake Concerns
– Client Identity
Know your client or verify his or her identity
Natural Person Client
- Name, Age, Address, Phone numbers, SS Number, Drivers License other
identifying information
Entity Client
- Parent and Subsidiary entities, Directors/Officers/Managers,
- Know the beneficial owners or at least the majority owners
– Client Due Diligence
OFAC SDN Check
Google Search
Background Checks
Periodic Updates
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Client Risk Assessment
• Know the clients circumstances, business activities and services provided
– Consider the money laundering risks involved with the transaction
– Look for the red flags such as money flowing through trust account
• Client risk factors
– Country geographic risk
Client from countries engaged in questionable activities or on watch lists
– Client risk considerations
Politically Exposed Person
Unusual circumstances
Hiding beneficial ownership
Cash intensive businesses
Entities with no legal purpose
Clients with no or multiple addresses
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Client Risk Assessment (cont.)
– Service Risk
Touching the money
Concealment of beneficial ownership
Unusual transactions
Cash payments
Shell companies
• Establish Client Due Diligence Training for Law firm or Company
• Be Careful out there (Hill Street Blues)
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Case Studies
• Used by permission of the State Bar of Montana published in the
“Montana Lawyer” Feb 2010.
• Taken from an article “Global Scammers now aiming to rip off Montana
Attorneys.”
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Sources Links
• OFAC Regulations for Corporate Registration Industry
http://www.ustreas.gov/offices/enforcement/ofac/regulations/facreg.pdf
• Specially Designated Nationals List (SDN)
http://www.ustreas.gov/offices/enforcement/ofac/sdn/sdnlist.txt
• OFAC website location for SDN list
http://www.ustreas.gov/offices/enforcement/ofac/sdn/index.shtml
• Title 31- CFR CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL,
DEPARTMENT OF THE TREASURY
http://www.access.gpo.gov/nara/cfr/waisidx_08/31cfrv3_08.html#500
• Links to State Rules of Professional Conduct
http://www.abanet.org/cpr/links.html
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Wolters Kluwer CT
Ethics in Evolving
Compliance Requirements
PRESENTED BY:
GARTH JACOBSON, ESQ.
Thank You For Attending