Letters to the 108th Congress

March 6, 2003

I write to you to bring to your attention the recent action of our House of Delegates in adopting the enclosed resolution concerning the proposed "Gatekeeper Initiative," a proposal being put forward by an international body, the Financial Action Task Force (FATF), intended to help reduce illegal money laundering activities.

The FATF is proposing that certain professionals, such as lawyers, should be enlisted as "gatekeepers" to the international financial and business markets. The FATF Gatekeeper Initiative proposal would extend certain anti-money laundering measures to lawyers, including (1) increased regulation and supervision of the profession, (2) increased "due diligence" requirements with respect to clients, (3) new internal compliance training and record-keeping requirements and (4) new "suspicious transaction reporting" requirements mandating that lawyers report to a government enforcement agency information of "suspicious" activities by clients involving possible money laundering.

The resolution adopted by the ABA House of Delegates on February 3, 2003, supports the limited and careful application to lawyers of proposed rules requiring record-keeping and increased scrutiny of certain client financial transactions, and urges that comprehensive training programs be developed to help lawyers identify potential money laundering schemes.

However, the Association opposes requiring lawyers to file suspicious-transaction reports on their client's activities because of the unprecedented and significant adverse impact on the attorney-client relationship, the independence of the bar, and the compliance-counseling role of lawyers in our society. As the background report accompanying the resolution notes, requiring lawyers to secretly report to law enforcement authorities about their clients "would be squarely contrary to the ethical rules that govern lawyers throughout the United States, would have the unintended effect of impairing client compliance with law, and could potentially undermine the fundamental principles underlying the legal system in the United States."

In other words, this proposal will achieve little more for our government and presents significant adverse consequences for our citizens and for the fight against money laundering, which we wholly support.

Furthermore, we do not believe there has been any rigorous or empirical assessment of the need for these types of reporting requirements, or the costs associated with them. The American Bar Association strongly urges that any consideration by the United States government of such "gatekeeper" proposals for lawyers be done in close consultation with the ABA so that the interests of society, as well as those of law enforcement, can be accommodated without affecting the legitimate needs of clients and the administration of justice.

We look forward to working with you on this important issue, and we would welcome the opportunity to meet with you and your staff to discuss this matter in greater detail.

Sincerely,

Alfred P. Carlton, Jr.

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