Global Magnitsky Sanctions Punish Corruption and Human Rights Abuses Worldwide
Global Magnitsky Sanctions Punish Corruption and Human Rights Abuses Worldwide Magnitsky Laws and Sanctions Series, No. 1 | March 5, 2018 | By…
United States Targets Chinese Dominance, Corruption in Africa
Trump Administration’s National Security Strategy Promotes a U.S.-Africa Trade-Based “Alternative to China’s Extractive Economic Footprint” and Threatens Sanctions and Foreign Aid Penalties for Corrupt Practices and Other Wrongs.
Hdeel Abdelhady to Speak on Managing Money Laundering, Trade Sanctions, and Corruption Risks
MassPoint’s Founder and Principal, Hdeel Abdelhady, will speak at a program on managing money laundering, trade sanctions, and corruption risks in business. The program, entitled “Know Your Business Partners: A Must to Managing Money Laundering, Trade Sanctions, and Corruption Risks,” will take place on November 17, 2017 in Washington, D.C. at the American Bar Association Business Law Section’s Fall 2017 Meeting.
Banks, Credit Unions and Other Financial Insitutions as Deputized Law Enforcement
The logic and law enforcement value of imposing anti-financial crime obligations on financial intermediaries are clear. Nevertheless, a reassessment is now appropriate, particularly given (1) increasing legal and regulatory demands on financial intermediaries; (2) the exclusion, through “derisking,” from the financial system of small and medium businesses (SMEs), nonprofit organizations, money services businesses (MSBs), and correspondent relationship-dependent banks; and, (3) overarching questions as to whether the financial and administrative costs of compliance within the current legal framework—generally or at specific points—yield commensurate law enforcement benefits without unduly harming the legitimate interests of individuals, businesses and other financial system stakeholders.
World Bank Accountability Act of 2017
The stated purpose of the World Bank Accountability Act of 2017 is to “increase accountability, combat corruption, and strengthen management effectiveness at the World Bank.” Among other measures, H.R. 3326 would, as summarized by the Financial Services Committee, “withhold a portion of future appropriations for the World Bank until the Treasury Department reports that the World Bank has undertaken reforms to fight corruption, strengthen management accountability, and undermine violent extremism.” In addition, the World Bank Accountability Act of 2017 would “authorize the Trump Administration’s request for reduced funding to the Bank’s International Development Association.”
Sovereign Commercial Enterprises: Anti-Corruption and Confidentiality Risks
State-owned enterprises (SOEs, including sovereign wealth funds) are prominent players in international business. Given their ownership, SOEs have garnered scrutiny for their lack of transparency and heightened anti-corruption and anti-money laundering risk, as have individual SOE executives and other personnel who qualify as Politically Exposed Persons. In connection with commercial activities, SOEs are not protected in most cases by sovereign immunity. Thus, SOEs can, like their privately-owned counterparts, be subject to foreign legal processes. Given the greater scrutiny around SOEs and some of the high profile enforcement actions involving them directly or indirectly (for example, the 1MDB case), anti-corruption and other compliance, as well as good governance and risk management, are essential to avoid legal, commercial, and reputational risk and loss.
Money Laundering and Lawyers’ Obligations After the Panama Papers
As Co-Chair of the Middle East Committee of the American Bar Association Section of International Law, MassPoint’s Hdeel Abdelhady organized and will moderate a program on lawyers’ obligations to detect and report illicit client activity, in particular money laundering. Lawyers in the EU, for example, have been required for years to perform client due diligence and file suspicious activity reports (SARs) in accordance EU anti-money laundering directives. U.S. lawyers have no parallel obligations; however, U.S. lawyers are prohibited by rules of professional conduct from knowingly allowing their services to be used for unlawful purposes. The Financial Action Task Force (FATF) has described the inapplicability to U.S. lawyers of customer due diligence (CDD) and SAR filing requirements as a weak spot in the U.S. anti-money laundering framework. Members of Congress have introduced legislation to apply such obligations to U.S. lawyers, and to require U.S. lawyers to collect and share with law enforcement authorities beneficial ownership information where lawyers directly form companies, trusts, and certain other entities for clients.
Panama Papers, Lawyers’ Professional Ethics and Due Diligence Obligations
In April 2016, a New York Times article posited this question: “Has the legal profession lost its moral compass?”
Did the Times ask the right question? Are moral and professional obligations the same? Should they be? What is or should be the role of lawyers in detecting and reporting financial crime, particularly money laundering?
This program will explore rules-based, ethical, and moral obligations of lawyers to detect and report illicit financial activity by clients. Among other topics, we will explore ABA Model Rule of Professional Conduct 1.2(d), which provides that a lawyer should “not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal or fraudulent.” In addition, we will examine whether and to what extent American lawyers, like covered financial institutions and some of their European lawyer counterparts, should be obligated to “know their clients” and report suspicious transactions, including from the perspective of the Financial Action Task Force (FATF), which recently recommended that the United States apply to lawyers, on a priority basis, “appropriate anti-money laundering/counter-terrorism financing obligations.”
Dollar Dominance and U.S. Jurisdiction Over Foreign Persons
U.S. dollar dominance in global transactions facilitates the extraterritorial reach of U.S. law, including sanctions and anticorruption laws. The FIFA case is highlights the links between dollar dominance and legal jurisdiction.