Reported by Paul J. Davies

The fight against money laundering, terror finance and tax dodging has made big demands on banks for years – and regulators have punished them harshly when they’ve come up short. However, a host of other professionals that help hide the world’s dirty money have mostly been left untouched. Chief among them are lawyers.

Switzerland is currently drawing up legislationthat would make law firms responsible for reporting suspicious transactions, especially those involved in creating shell companies or property deals. It would be a good step forward if enacted, setting an example for other countries that have criticized Switzerland for being too lax on regulation, notably the US and UK. 

A report this month on illicit financial flows out of African countries by Transparency International found non-financial enablers from 33 different countries involved in the 78 cases it reviewed. Top of the list as hosting the lawyers and trust or company service providers were the British Virgin Islands, Switzerland, the UK and US. 

British lawyers are meant to flag potentially dubious transactions, but reporting is poor. In the US, the Senate blocked a bill last year — called the ENABLERS Act — that would have imposed new duties on lawyers, art dealers and others. As it stands, US lawyers are under no obligation to do due diligence on their customers or their funds, or to stop working with them if they suspect their services are being used to commit crimes. There’s a clanging irony here, given that the US has been one of Switzerland’s biggest critics for not doing enough to stop global dirty money flows.

And all this is in spite of details from leaks and scandals such as the Panama Papers, which have shown American, British and other western lawyers are regularly involved in helping bad people move and wash their money.

Read full report: https://www.bloomberg.com/opinion/articles/2023-12-18/money-laundering-lawyers-handle-dirty-cash-too-make-them-report-it