Update from the US – review of 2021
Wednesday 2 February 2022
Laurel S Terry
Penn State Dickinson Law, Pennsylvania, US
LTerry@psu.edu
This article highlights two sets of developments that took place in the United States in 2021 that are relevant to the work of the IBA Regulation of Lawyers’ Compliance Committee. The first set of developments are related to Covid-19. As was true elsewhere in the world, in the US the Covid-19 pandemic was a dominant presence in 2021, affecting lawyers, clients and those who regulate lawyers.
The American Bar Association (ABA)’s Center for Professional Responsibility[1] [CPR] monitors US developments related to the regulation of lawyers’ compliance. It is one of the most useful US resources available, even though the ABA is a voluntary national organisation of lawyers and the primary regulation of US lawyers is not carried out by the federal (US) government, but by the judicial branch of each US state in which a lawyer is licensed.
Many of the ABA CPR’s Covid resources can be found on its webpage entitled ‘Practice Forward: The New Normal.’[2] These resources include items such as a 2021 publication entitled ‘Practicing Law in the Pandemic and Moving Forward: Results and Best Practices from a Nationwide Survey of the Legal Profession.’[3] The ABA CPR website also includes links[4] to materials that address pandemic-related compliance issues such as cybersecurity, confidentiality and the ethics of working from home.
Some of the Covid-related challenges that US lawyers and their regulators had to address during 2021 included situations in which US lawyers engaged in remote work from a US state in which they were not licensed. Formal Opinion 498[5] of the ABA Standing Committee on Ethics and Professional Responsibility (10 March 2021) addressed this topic of the ethics of ‘virtual practice’, as did several state ethics committees.
A second set of noteworthy developments that took place during 2021 related to the Committee’s interest in regulatory issues involving corruption and anti-money laundering (AML) compliance. In June 2021, US President Joe Biden identified the fight against corruption as a core US national security interest. In December 2021, the Biden Administration issued the first-ever United States Strategy on Countering Corruption.[6] The five pillars of this strategy are:
- modernising, coordinating, and resourcing US government efforts to better fight corruption;
- curbing illicit finance;
- holding corrupt actors accountable;
- preserving and strengthening the multilateral anti-corruption architecture; and
- improving diplomatic engagement and leveraging foreign assistance resources to advance policy objectives.
With respect to pillar two on curbing illicit financing, the ‘lines of effort’ identified in the Strategy include, among other things, the following items of interest to lawyers:
- finalising effective beneficial ownership regulations, and building a database of the beneficial owners of certain companies, in order to help domestic and international partners identify bad actors;
- promulgating regulations targeting those closest to real estate transactions to reveal when real estate is used to hide ill-gotten cash or to launder criminal proceeds; and
- using existing authorities, and working with Congress to expand authorities where necessary, to make sure that key gatekeepers to the financial system (including lawyers, accountants and trust and company service providers) cannot evade scrutiny.
The December 2021 United States Strategy on Countering Corruption[7] references a law called the National Defense Authorization Act for Fiscal Year 2021[8] [‘NDAA’], which took effect on 1 January 2021 and which passed despite then-President Trump’s veto. In addition to its many other defence and national security provisions, the ‘omnibus’ NDAA law included a section entitled the ‘Anti-Money Laundering Act of 2020’ and another section entitled the ‘Corporate Transparency Act’. The NDAA contains the most substantial reforms to US AML and counter-terrorism financing (CFT) laws since the US Patriot Act 2001. In December 2021, the US Department of the Treasury’s Financial Crimes Enforcement Network (FINCEN) issued a Notice of Proposed Rulemaking[9] to implement the provisions of the Corporate Transparency Act’s beneficial ownership information reporting provisions.
Also in December 2021, pursuant to the mandate in the Anti-Money Laundering Act 2020, FINCEN published a request for information and comments[10] on ways to streamline, modernise and update the AML/CFT regime of the US.
In sum, 2021 was a busy year in the US for issues related to the regulation of lawyers’ compliance, and the important developments will likely continue in 2022.