Hdeel Abdelhady

Hdeel Abdelhady is a Washington, D.C. based lawyer and strategy advisor with advising financial institutions, companies, and government-affiliated entities on transactions and regulatory matters often requiring bespoke, cross-disciplinary, and cross-legal system solutions.

Anti-Corruption

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.

Critical Resources

Nonfinancial Risk for Banks: Environmental Social and Governance (ESG)

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).

Anti-Corruption

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.”

Sanctions

Non-Dollar Trade Could Curtail the Global Reach of U.S. Sanctions and Other Laws

American economic and financial heft facilitates the extraterritorial reach of U.S. law. For example, global transactions that are denominated in U.S. dollars and processed through the U.S. financial system “touch” the United States, come within its jurisdiction and create a jurisdictional nexus to foreign parties, property and events associated with those transactions.

Russia Sanctions

OFAC Directive 1: Financing, Debt & Equity Prohibitions

On July 30, 2015, the Office of Foreign Assets Control (OFAC) made explicit the sanctioned status of certain entities operating in Russia’s financial services sector by adding them to the Sectoral Sanctions Identifications List (SSIL).The SSIL identifies parties subject to U.S. Sanctions targeting specific sectors of the Russian economy (Sectoral Sanctions) within the framework of Ukraine/Russia-related sanctions adopted in response to events in Ukraine. Currently Russia’s financial services, defense, and energy sectors are targeted. Nevertheless, they may encounter legal, commercial, or reputational risk in the context of current or planned business with or involving a sanctioned entity, whether listed on the SSIL (or another sanctions list) or sanctioned as a matter of law (such as under the 50% Rule).

Agriculture Investment

Compliance for Financial Institutions: Anticorruption – AML Nexus

Enforcement authorities in the US and Asia reportedly are investigating financial institutions for potentially corrupt employment and business relationships with family members of government officials. The investigations underscore policy links between anti-corruption and anti-money laundering regimes where dealings with Politically Exposed Persons (PEPs) are involved.

This article, published by Hdeel Abdelhady in Butterworths Journal of Banking and Financial Law, briefly discusses the pending investigations and the anti-corruption-AML policy nexus, and suggests, with respect to PEPs and more generally, that financial institutions facilitate fluidity in their compliance programs to allow for the sharing of information and adaptation of compliance protocols across (sometimes impermeable) internal functional and disciplinary lines.

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