Client Due Diligence: Anti-Money Laundering and Ethical Obligations for Lawyers

Hardy, P. D., & Danch, S. Client Due Diligence: Anti-Money Laundering and Ethical Obligations for Lawyers.

When the so-called “Panama Papers” scandal broke in 2016, it cast an unpleasant spotlight on the potential role of lawyers across the globe assisting – knowingly or unknowingly – their clients in money laundering, tax evasion, and other illegal activity. Moreover, the Panama Papers scandal re-energized efforts to identify the true beneficial owners of legal entities, due to concerns that bad actors were using shell companies to obscure their activities through the misuse of corporate forms. Other, similar scandals have followed the Panama Papers, such as, most notably, the “Pandora Papers.”

Lurking behind these scandals and the predictable reactions and rhetoric of law enforcement, regulators, watchdog groups, and legislators was the perception that the United States – perhaps, ironically – has actually served as one of the world’s greatest havens for global tax evasion and money laundering for illicit actors from around the world. This perception lingered primarily because it was relatively easy to incorporate legal entities in the United States without disclosing beneficial ownership. This perception also potentially arose because the United States has a stable and safe economy and, therefore, serves as a good place to invest assets, legally or illegally obtained, including in the high-end real estate market.

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