MassPoint News
Hdeel Abdelhady is due to speak about planning for and managing uncertainty in social impact investment, particularly in emerging markets. Ms. Abdelhady, who is MassPoint’s Founder and Principal, has 15 years of experience in transactions, disputes, and regulatory matters in and involving emerging and developing markets in Africa, Asia, the Middle East, and Latin America.
Congressional Hearing on Terrorism Finance Probes Bank Secrecy Act Data Processing Effectiveness, Lack of Beneficial Ownership Transparency, and Potential BSA and Patriot Act…
On April 27, 2017, I attended a Congressional hearing on “Safeguarding the Financial System from Terrorist Financing,” held by the House Committee on Financial Services’ Subcommittee on Terrorism and Illicit Finance (the “Subcommittee”). The sole witness was Mr. Jamal El-Hindi, Acting Director of the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury charged with protecting the financial system from money laundering, terrorism financing and other illicit activities. The hearing’s purposes were to examine the methods and efficacy of FinCEN data collection, processing and information sharing and whether the Bank Secrecy Act (BSA) and USA PATRIOT Act should be amended to improve FinCEN’s anti-money laundering (AML) and counter-terrorism financing (CFT) capacities and performance. In this brief MassPoint update, I highlight BSA data collection and usage numbers and some of the questions and issues that appeared to be of particular interest and/or concern to Congress members in attendance, taking into account the nature and frequency of the questions asked, the tone of questions, and related requests for additional or clarifying information from FinCEN.
Nonfinancial Risk for Banks: Know Your Customer’s Environmental, Social and Governance Risk Occasional Note| April 11, 2017 | Author Hdeel Abdelhady | PDF It goes without…
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.
As banks continue to manage regulatory and risk complexity, they should add Environmental, Social, and Governance (ESG) and general business conduct issues to their nonfinancial risk matrices. ESG and business conduct issues—whether or not the subject to legal prescriptions— are no longer ancillary to risk and reputation management. Nor can ESG and business conduct awareness be regarded as merely ornamentation to enhance corporate appearance (or conceal corporate blemishes).
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).
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.”
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.”