Report Identifies Attorney-Client Accounts as Major Loophole in Money Laundering Laws

In its report released last week, the U.S. Senate’s Permanent Subcommittee on Investigations revealed that Chicago-based Sidley Austin LLP transferred approximately $21 million for a government official, Teodor Obiang, son of the president of Equatorial Guinea, who’d long been suspected of misappropriating the country’s oil and timber resources for personal gain.

The report’s findings may prompt deeper government scrutiny into the bank accounts lawyers hold for their clients. The Subcomittee found these accounts represent a serious loophole in anti-money laundering provisions.

“Larger law firms are certainly more likely to come into contact with suspicious transactions where money laundering could be facilitated,” said Jeffrey Cramer, a former federal prosecutor who heads the Chicago office of Kroll, a risk-consulting company.

Sidley sought clearance from the Department of Justice to make sure the $21 million wire transfer did not violate the law, the report says. This illustrates the challenges often faced in complying with money laundering laws.

“It’s pretty clear from the report that we did what we were supposed to do,” said Janet Zagorin, a spokeswoman for the firm.

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Posted by joshua on February 9, 2010. Filed under Home,Law Firm News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry