Takeaway:
Attorneys should exercise caution when dealing with issues such as cryptocurrency and shell companies. Professionals who enable unlawful corporate activity could face harsher penalties under the Biden Administration’s new anti-corruption plan.
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Last week brought a surge of information about the Biden Administration’s newly released Strategy on Countering Corruption. It appears that no one can evade scrutiny, including attorneys.
Addressing corruption as a national security threat, Biden’s strategy targets corporate misconduct from all angles and emphasizes the role of the professionals who advise and structure corporate transactions.
The report issued this week identified five “pillars” to combat corruption:
- Modernizing and coordinating the government’s existing anti-corruption efforts
- Curbing illicit finance
- Holding wrongdoers accountable
- Strengthening multilateral ties
- Harnessing foreign assistance.
Under the administration’s strategy, professionals such as lawyers and accountants are seen as “gatekeepers” to illicit finance. The administration is considering harsher penalties for professionals who are complicit in wrongdoing.
What does this mean for attorneys?
According to the report issued by the Biden Administration, attorneys, accountants, and company incorporators “are not required to understand the nature or source of income of their clients or prospective clients.” As a result, they “can serve as an access point to the U.S. and international financial systems, including by facilitating the creation of opaque corporate vehicles.” It is difficult for law enforcement to prove intent and knowledge of attorneys when they are involved with illicit funds.
The Administration seeks to change this under the anti-corruption strategy issued this week. Working with Congress as needed, the administration will consider additional oversight to such “gatekeepers,” including increased penalties for malfeasance as well as state-level professional sanctions.
Attorneys should exercise caution when dealing with issues such as cryptocurrency and shell companies – both of which will be subject to closer regulation under the Administration’s new strategy. The Administration announced it will “refine” regulations to apprehend those who use cryptocurrency to evade SEC jurisdiction, and the Department of the Treasury has proposed establishing a database of beneficial ownership information to help prevent the movement of money through shell companies. Attorneys should be cautious not to take any action that could be seen as covering up client deficiencies or in any way assisting companies in moving illicit funds.
To read the Fact Sheet published by the White House, click here: https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/06/fact-sheet-u-s-strategy-on-countering-corruption/
