Risk Update

International Risk Roundup — Anti-money Laundering Commentary, PR Risk in HK

One could make the case for an internal “New Speaking Intake” workflow/clearance process: “Martin Rogers of US law firm Davis Polk withdraws from Hong Kong national security law forum following criticism” —

  • “The Asia chairperson of US-based law firm Davis Polk & Wardwell has withdrawn from a Hong Kong forum on the national security law following criticism that it was a ‘propaganda event.'”
  • “Partner Martin Rogers said in a LinkedIn post on Saturday that his agreement to participate did not reflect support for any topics discussed: ‘I was invited to speak, and accepted the invitation, in my individual capacity alongside other independent experts on specific matters including procedural challenges that could arise related to the national security law and laws in other jurisdictions.'”
  • “‘My agreement to participate did not reflect an endorsement or support of any topics discussed or individuals or organisations involved,’ he added. However, Rogers has openly expressed support for the security law at a previous government forum.”
  • “In a LinkedIn post last week, he tagged his law firm and said it was his honour to take part in the event to commemorate the second anniversary of the security law.”
  • “Samuel Bickett, a US lawyer who was forced to leave Hong Kong after serving a jail sentence over the 2019 protests, questioned how Davis Polk had approved the event.”
  • “‘Lawyers can and should provide commentary on the [security law] at professional and academic conferences, but that’s not what this event is. It’s a propaganda event intended to validate the NSL as ‘just another law,’ and [Davis Polk] is being used as a tool in service of that goal,’ he said on Twitter last Friday.”
  • “He later tweeted: ‘I hope int’l law firms will take a hard look at their human rights oversight procedures across the world. What are your lawyers doing in your firm’s name that you don’t know about?'”

The Law Society’s Gazette brings us commentary from Jonathan Goldsmith, Law Society Council member for EU & international and a former secretary general of the Council of Bars and Law Societies of Europe: “AML laws have failed: it is time to start again” —

  • “I want to focus here on the elaborate structure which they foisted on us to stop the servicing of corrupt money – the anti-money laundering laws proliferating around the world. These have failed, too. It is not an exaggeration to say that those laws lie in ruins, having failed to stop the penetration of Western economies by corrupt Russian money.”
  • “Yet there seems no recognition that the AML regime is fatally flawed. As with all mistakes, its supporters believe that it was just not applied strictly enough, and needs to be reinforced.”
  • “To understand the depth of wrongness of the current AML concept, one need only read Catherine Belton’s book, ‘Putin’s People,’ which was published in 2020. This documents in some detail the various criminal dealings which led to the rise of the Russian billionaires whose money flooded the West. She conducted dozens of interviews over many years. Even so, there are large gaps because so much took place behind an impenetrable veil of secrecy, and through multiple layers of shell companies in tax havens which lack transparency.”
  • “Yet the OECD, the EU, the UK government and others behind the construction of the AML laws expect every solicitor to conduct his or her own investigation as part of customer due diligence and ‘know-your-client’. The investigation is thus privatised and fragmented, having to be done over and over again by each solicitor or law firm as it is consulted.”
  • “Yet the depth of knowledge required – of Russian politics, of the Russian language, of the many varied players, of the multiplying companies and fronts and transactions, of Russian laws, and of historical events – is beyond the resources of a law firm. It is ridiculous to expect law firms to investigate what takes years, many interviews, and much academic knowledge.”
  • “It is also a very inefficient way of going about things, because it requires the background to be re-investigated over and over again by separate lawyers and law firms… It so happens that there is now a ‘Putin’s People’ to help with Russian investigations. But that stops in 2020, and has understandable gaps. Is there a ‘Putin’s People’ for Kazakhstan, China and whatever other countries fall within the same category?”
  • “A system which privatises and fragments the need to research the most complex events imaginable is both inefficient and unworkable. And we have just seen the results: huge compliance departments failed to stops serious penetration of our economies, with dire results.”
  • “The legal profession made a mistake in its opposition to the laws when they were first introduced. We opposed it on the basis that it made us breach lawyer-client confidentiality through reporting suspicious transactions. We got nowhere with these claims, which were rejected by the courts.”
  • “We would have been better off by pointing out that the system being set up, with its requirement for solicitors to investigate complexities and historical events which are beyond reasonable reach, is unworkable, and for them to be re-investigated by each player in the chain over and over again is completely inefficient.”