Risk Update

Professional Risk AML, Reputation & Ethics — Enablers Act Disabled, Lawyer Ethics in Focus

US Senate blocks major anti-money laundering bill, the Enablers Act” —

  • “The Senate has blocked a critical bill to curb financial crime and corruption in the United States, a setback for what advocates have called the most significant reform to the country’s anti-money laundering laws in 20 years.”
  • “The Enablers Act would for the first time require trust companies, lawyers, art dealers and others to investigate clients as well as the source of money and other assets that are moved into the American financial system.”
  • “Republican Sen. Patrick Toomey, ranking member of the U.S. Senate Banking Committee, was behind the move to strike the bill from the NDAA, according to media reports and interviews with members of Congress and staffers. The banking committee plays an important role in advancing the fuller defense bill to a vote in Congress.”
  • “Responding to questions sent to Toomey, a Republican aide on the banking committee said that the senator is not the only member of Congress or government agency with reservations about the bill. The Enablers Act should go through regular legislative processes, the aide said.”
  • “The failure of the Enablers Act to pass comes despite increasingly high-profile support. Earlier this week, Jake Sullivan, the national security advisor to U.S. President Joe Biden, voiced his ‘full support’ for the bill.”
  • “Democratic Sen. Sheldon Whitehouse also signaled his support when speaking this week at the International Anti-Corruption Conference in Washington D.C. ‘It makes no sense to have money laundering rules for banks, to have disclosure for shell corporations, but to let somebody run into a lawyer’s office or a hedge fund and dodge all of that protection,’ said Whitehouse, calling out ‘opposition from big American lobbying groups.'”
  • “The American Bar Association has opposed the bill, which would require some lawyers to identify and verify clients and to submit reports of suspicious financial activity to the U.S. Treasury. ‘The Enablers Act amendment would undermine fundamental principles of the rule of law and the rights of citizens,’ ABA President Deborah Enix-Ross wrote in an October letter to Congress.”

Why It’s Easy for Attorneys to Enable and Encourage Illegal Acts” —

  • “As the Jan. 6 House special committee refers criminal charges against Donald Trump and his attorney John Eastman to the DOJ, University of Minnesota law professor David Schultz [professor of law at the University of Minnesota, where he teaches professional responsibility (legal ethics for attorneys), and is a professor of political science at Hamline University.] considers why attorneys facilitate illegal behavior among clients, and how legal ethics education should be improved.”
  • “In its investigation of the Jan. 6, 2021 attack on the US Capitol, the US House Select Committee referred to the Justice Department four potential criminal charges against former President Donald Trump.”
  • “Yet lost in the executive summary was a recommendation that Trump attorney and former law professor John Eastman also be charged with obstruction of a government proceeding and conspiracy to defraud the US.”
  • “The basis of the claim is that he helped hatch the scheme to encourage former Vice President Mike Pence to reject electoral votes from certain states and encourage filing of false electoral vote certificates. In the end, Eastman’s lawyering enabled Trump’s bad behavior.”
  • “Eastman appears to have recommended this approach to Trump even though, according to the January 6, report, he knew his arguments had no basis in law or facts. Why did he do it?”
  • “But despite such rules and threat of disbarment and criminal sanctions, some attorneys still act badly. Why do knowledgeable and good attorneys such as Eastman do bad things? I have spent a quarter of a century as a law professor teaching legal ethics to law students, and this is a question I regularly pose.”
  • “But perhaps the problem is the nature of legal education. From day one, law students are taught to be zealous advocates for their clients. Their task is to represent them and envision or create ways to view whatever their clients want, even if illicit, as legal. Rarely does law school encourage attorneys to tell their clients no or to conform to the law.”
  • “The rules of professional conduct for attorneys give lip service to the idea that our duties include promoting democracy. Yet there is little incentive in an adversarial system to put social justice and doing the right thing ahead of client interests.”

Trump Lawyer Takes Leave From Firm After Jan. 6 Panel Allegation” —

  • “Stefan Passantino has taken a leave of absence from law firm Michael Best & Friedrich following an allegation that he advised a Trump White House staffer to mislead the House committee investigating the Jan. 6 attack at the US Capitol.”
  • “Passantino, who was the top ethics lawyer in the Trump White House, later advised White House aide Cassidy Hutchinson as she prepared to go before the committee. Hutchinson switched lawyers before testifying publicly in a June committee hearing.”
  • “Passantino said he was not acting on behalf of Michael Best in his work for Hutchinson and pushed back against the allegation, reported by CNN, that he advised her to mislead lawmakers.”
  • “‘I represented Ms. Hutchinson honorably, ethically, and fully consistent with her sole interests as she communicated them to me,’ Passantino said. ‘I believed Ms. Hutchinson was being truthful and cooperative with the committee throughout the several interview sessions in which I represented her.'”