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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.
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Hdeel Abdelhady Appointed ABA Liaison to Dubai International Financial Centre Courts (DIFC Courts)

Hdeel Abdelhady has been appointed to serve as the American Bar Association (ABA) Section of International Law’s Liaison to the Dubai International Financial Centre Courts (DIFC Courts). Ms. Abdelhady, who is MassPoint’s Founder and Principal, has lived and worked in Dubai and previously worked in the DIFC and collaborated with DIFC entities. Ms. Abdelhady currently serves as a Co-Chair of the ABA Section of International Law’s Middle East Committee, which she has led for three years as a Co-Chair. She also serves on the Board of the American Bar Association Rule of Law Initiative’s Middle East and North Africa Council and as the ABA Section of International Law’s Liaison to the Organisation for Economic Co-operation and Development (OECD).
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Identifying UAE “Foreign Officials” for Anti-Corruption Compliance Purposes

Companies and other organizations doing business in the UAE or with enterprises owned in part by a UAE Government party at any level (e.g., the federal/union government or a government of one of the country's constituent emirates (e.g., Dubai, Abu Dhabi, Ras al Khaimah), or entities owned in part by any of them, should be aware that under UAE law, the definition of "public official" (i.e., a government official) includes employees and directors of enterprises in which a UAE Government party holds less than a majority ownership stake and does not, formally or effectively, exercise control.
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Senate Bill to Combat ISIS Targets “Jurisdictions of Terrorism Financing Concern”

On February 13, 2017, Senator Bob Casey (D-PA) introduced in the Senate the “Stop Terrorist Operational Resources and Money Act” (the “STORM Act”). The purpose of the STORM Act is to “establish a designation for jurisdictions permissive to terrorism financing, to build the capacity of partner nations to investigate, prosecute, and hold accountable terrorist financiers, to impose restrictions on foreign financial institutions that provide financial services for terrorist organizations, and for other purposes.” The STORM Act would permit the President to designate a country as a “Jurisdiction of Terrorism Financing Concern” upon determining that “government officials know, or should know, that activities are taking place within the country that substantially finance the operations of, or acts of international terrorism by, foreign terrorist organizations.”
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Trump’s Foreign Policy May Further Strain Foreign Correspondent Banking (Derisking)

The Trump Administration's positions on countering the financing of terrorism were articulated by Treasury Secretary nominee Steven Mnuchin during his confirmation hearings, where he expressed his commitment to working unilaterally and multilaterally to combat terrorism financing (see, for example, hearing segment starting at 55:18). The Administration's interest in strengthening CFT is shared on the other side of Pennsylvania Avenue, where the U.S. House of Representatives' Committee on Financial Services recently released the results of a 2-year investigation of terrorism financing and, among other measures, recommended that the United States adopt a "whole-of-government" strategy to combat terrorism financing.
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Public Hearing: Chinese Investment in the United States: Impacts and Issues for Policymakers

On January 26, 2017, the U.S.-China Economic and Security Review Commission will hold a public hearing on Chinese Investment in the United States: Impacts and Issues for Policymakers. This hearing follows the Commission's November 2016 Annual Report to Congress, in which the Commission recommended, among other things, a bar on investment in the United States by Chinese state-owned enterprises (for background, see MassPoint's November 2016 Business Update, Proposals to Curb Foreign Investment in the United States Gaining Steam After the Election and MassPoint's April 2016 Business Update, Foreign Investment in U.S. Agriculture Under Scrutiny).
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Proposals to Curb Foreign Investment in the United States Gain Steam After Election

Acquisitions of U.S. businesses by SOEs, particularly Chinese SOEs, have been a key focus of concern about foreign investment in the United States. Chinese and other SOEs would be well-advised to acquaint themselves with the gathering focus in Washington on their U.S. investments, commercial activities (post-acquisition), and sovereign immunity under U.S. law and in U.S. litigation—non-Chinese SOEs should not assume that they will not be subjected to the same or similar scrutiny. At minimum, SOEs—Chinese and non-Chinese—may be well-served by understanding the origins of some Trump transition team (and later administration) proposals and/or their linkages to prior proposals. Privately-owned foreign enterprises should also take note, as sentiments about foreign investment in the United States may also directly or indirectly affect their planned or future investments (including, perhaps, favorably, if SOEs are (to an extent) taken out of competition for U.S. assets as a result of legal, policy, or political measures adopted in the United States).
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Hdeel Abdelhady Quoted on U.S. Election Impact on Foreign Investment

Hdeel Abdelhady was quoted in Islamic Finance News, on the potential impact of the U.S. Election outcome on Islamic finance and investment in the United States. She said: “Trump’s rhetoric and proposals — such as the ‘Muslim ban’ (which is legally problematic and impracticable) and other politically opportunistic invocations of Islam and Muslims — would likely carry over and create an inhospitable environment for Islamic finance, including because Trump’s candidacy appears to have normalized, in some quarters, anti-Muslim, anti-‘other’ speech and conduct . . . even if Trump — a self-styled ‘dealmaker’ — were inclined to support wholly or partially Islamic investments in the US (such as the CityCenterDC mixed use development located less than a mile from both Trump’s recently opened DC hotel and the address to which he aspires, 1600 Pennsylvania Avenue), the atmosphere and supporters he has cultivated as a candidate would likely be impediments.”
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