Tightening Control Over Lawyers, Fighting Money Laundering

Control over lawyers is tightening in the US and Switzerland in the fight against money laundering.

As of January 1st, amendments to the Corporate Transparency Act have come into effect in the US.

According to information published in FT, these amendments aim to hold lawyers, accountants, and other providers of corporate services accountable for aiding representatives of the criminal world in laundering large sums of money, even if they did so unwittingly.

In 2014, an investigator posing as a representative of a corrupt foreign government met with 16 Manhattan lawyers to transfer millions of suspicious funds to the US. Almost all of them provided detailed instructions on laundering money through dummy companies.

This case demonstrated that there were no legislative norms or ethical rules requiring lawyers and other corporate service providers to know their clients. However, the new law changes this situation.

Under the Corporate Transparency Act, consultants assisting in establishing legal entities in the US must provide information about themselves as “company applicants.” This means they will be linked to the founders in a federal database. Failure to comply with the law could result in imprisonment for up to two years.

Similar changes are also taking place in Switzerland. Currently, the country is developing a law that would require legal firms to report suspicious transactions, especially those related to the creation of dummy companies or the acquisition of real estate.

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