Treasury department proposal could affect client trust accounts

May 9, 2012
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The American Bar Association is asking the U.S. Department of Treasury to reconsider possible rule changes announced in February that are aimed at tackling money laundering and terrorist financing. The bar association believes the proposals would impose “unreasonable and excessive” burdens on law firms.

The ABA sent a letter to the treasury department’s Financial Crimes Enforcement Network May 4, urging FinCEN not to proceed with proposed rules on customer due diligence requirements for financial institutions. The proposed rules would establish a categorical requirement for financial institutions to indentify beneficial ownership of their accountholders, subject to risk-based verification and pursuant to an alternative definition ownership as described in the proposals. The question of beneficial ownership can arise in the context of accounts created by an individual or entity, which could include a law firm or accounting firm, in which these firms could be acting on behalf of another person without disclosing that fact.

The proposals, according to the ABA, would require law firms that have client trust accounts at financial institutions to disclose the identity and other ownership information regarding the clients.

“If adopted in their current form, those proposals could impose unreasonable and excessive burdens on many law firms with client trust accounts and could undermine both the confidential lawyer-client relationship and traditional state court regulation of lawyers,” wrote Kevin L. Shepherd, chair of the ABA’s task force on gatekeeper regulation and the profession.

He cites the ABA’s Voluntary Good Practices Guidance for Attorneys to Detect and Combat Money Laundering and Terrorist Financing that the ABA House of Delegates adopted in August 2010 as a way for attorneys to address the issues raised in the proposals without following “burdensome and rigid ‘one-size-fits all’” rules.

Shepherd believes the proposals would undermine the client-lawyer relationship and confidentiality under ABA Model Rule 1.6 and corresponding state rules.

FinCen announced last week it has extended its comment period on these proposals. Follow this link  to learn how to submit comment.
 

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  1. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  2. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  3. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  4. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  5. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

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