Thursday, 5 January 2017

Are Law Firms Involved In Money Laundering?

Tens of billions of dollars every year move through opaque law-firm bank accounts that create a gap in U.S. money-laundering defenses, according to a Wall Street Journal analysis.
These accounts were used by suspects in a multibillion-dollar scandal involving a Malaysian state investment fund known as 1MDB, according to a Justice Department description of events. They also played a part in a Florida Ponzi scheme, in a case related to an official of Equatorial Guinea and in a dozen other U.S. money-laundering cases over the past decade, case records show.

Law firms lump together client money they are holding for short periods, such as while real-estate sales are pending, into pooled bank accounts, and the law firms face no requirement to disclose whose cash is in the accounts. Banks say they generally see only a law firm’s name.
Money often stays in the accounts for only a few days or weeks. At the request of law firms’ clients, funds can be sent from the accounts to other parties, with scant transparency.
While banks and other firms that move money across borders face heavy pressure to alert regulators to suspicious activity, U.S. law firms protect the confidentiality of their pooled accounts in the name of attorney-client privilege.

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