Risk Update

Risk Reading — AML & Enablers Act + Law Firm Implications, Real Estate DQ Motion

Lawyers Should Be Key Reporters in Anti-Money Laundering Efforts” —

  • “As attorneys who have spent substantial portions of our careers working to combat money laundering and financial crime, we understand well the threat posed by the unchecked flow of dirty money. These transactions through the US financial system often stem from corruption, drug trafficking, and other serious crimes.”
  • “It’s a discomforting, if instructive, truth that when crooks and dictators consider hiding their criminal proceeds in the US, their first stop is often, unfortunately, a lawyer.”
  • “International standards have evolved to include legal professionals among those required to help prevent and report cases of money laundering. But loopholes in US anti-money laundering laws continue to exempt many gatekeepers in the financial system. This includes certain lawyers and accountants, as well as company agents and trust providers, who help clients anonymize and hide dirty money. America is nearly unique in this way.”
  • “The Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act—or ENABLERS Act—is an amendment to the annual National Defense Authorization Act. It would close these loopholes by authorizing the Treasury Department to require certain categories of financial service providers to adopt anti-money laundering safeguards. This would include filing a notice when they suspect that a transaction is being used to launder funds.”
  • “If passed, the ENABLERS Act would incorporate into federal law principles already established as official best practices by the international anti-money laundering standard setter, the Financial Action Task Force. These best practices require customer due diligence and record-keeping protocols for lawyers and other independent legal professionals and accountants who implement transactions for clients in corporate formation, money management, and similar business services.”
  • “This team has worked extensively on money laundering matters representing a range of parties in many, often complex, situations and environments. We have zero concern that the ENABLERS Act would threaten attorney-client privilege, client confidentiality, or any principles governing the ethical obligations of attorneys and other professionals to their clients.”
  • “Notably, the ABA’s model ethics rules already allow America’s lawyers to report criminal activity by clients to prevent a crime that would cause substantial injury to the financial interests or property of another, or to mitigate injury when the client has used the lawyer to do this. The ENABLERS Act is consistent with this framework.”
  • “Lawyers are among the first defenders of our freedoms. They should be enlisted to help protect our financial system from being a conduit for criminal and kleptocratic funds. Congress has a crucial opportunity right now to bring lawyers in as partners in fighting financial crime.”

Conflict of Interest? Attorney Disqualification Requested in Houston Real Estate Trust Fight” —

  • “Citing potential ethics violations, counsel for the former head of a publicly traded real estate investment trust is asking a Houston judge to disqualify the opposing counsel because of his past relationship with a client.”
  • “In Pillarstone, counsel for Mastandrea asked opposing counsel Alistair Dawson of Beck Redden to withdraw and Dawson refused, according to court documents. Mastandrea responded with the Nov. 14 filing of the disqualification motion.”
  • “Peter Tropoli, Whitestone’s general counsel, told Texas Lawyer that Dawson is on the case at their request and he has never represented Pillarstone, which is the plaintiff. While Mastandrea is chairman of the board, he is not a named plaintiff.”
  • “‘There is no conflict that would prevent him from continuing to represent Whitestone in this case,’ Tropoli said. ‘In our judicial system, when people are sued, they get to choose who represents them.'”