Millions of dollars every year dozens move through the bank opaque accounts firm that create a breach in US money laundering defenses, according to an analysis by The Wall Street Journal.
These accounts were used by suspects in a scandal involving several billion of Malaysian state investment funds known by 1MDB, according to a description of the Ministry of Justice events. They also played a role in a Florida Ponzi project in a case involving an official from Equatorial Guinea and a dozen other money laundering cases in the United States over the past decade, according to the documents.
Law firms put together money from clients they hold for short periods, such as when real estate sales are pending, grouped into bank accounts and law firms are not required to disclose the cash. Banks say they often see the name of a law firm.
Money is often still in the accounts just for a few days or weeks. At the request of client companies, funds can be sent accounts to other parties, with little transparency.
While banks and other companies transferring money across borders face strong pressure to alert regulators about suspicious activity, US law protects the confidentiality of their accounts jointly in the name of confidentiality Between lawyer and client.
The result is "a way to get money into the US system without using anti-money laundering measures," said Elise Bean, a senior adviser to a Senate research subcommittee that analyzed the vulnerability of the banking system. It is a "huge legal vacuum."
The Financial Action Task Force, a global group setting international standards for anti-money laundering procedures, described the accounts of vulnerable law firms. In a December report assessing US efforts to fight financial crime, the group criticized the scant oversight of US lawyers, who are not required to mark suspicious financial activity.
Ms. Klein said the ABA board supported to alert lawyers suspicious situations and continue to support reasonable efforts to fight money laundering "to minimize the impact on client-attorney privilege" and customers' right to an effective defense .
Most accounts do not consolidate the idea of law firms. Many state courts or legislatures require lawyers to combine small amounts of cash and deposited funds only briefly, to generate interest in financing free legal aid for the poor. Most of these accounts are called IOLTA, for interest of attorney trust accounts. Law firms hold some other client funds on behalf of their clients.
Consolidated financial statements usually contain cash for the purchase of real estate, ongoing legal regulations and prepaid legal services, but may contain money that a business client is valid for virtually any purpose, said Nabil Foster, partner Of Hinshaw and Culbertson LLP in Chicago.
Of millions of dollars that would be obtained from hundreds of millions of dollars. The Malaysian state funds known by 1MDB, approved by the public accounts law firm in the United States, federal prosecutors said in proceedings filed in July. Researchers from several countries believe that billions of dollars are not found in the capital of Malaysia.
The Ministry of Justice in civil suits seeking the confiscation of assets allegedly bought with stolen money 1MDB said law firms that hold their money in joint accounts authorized transfers were used to pay American luxury real estate, yachts and jets .
Other transfers have moved money from a joint account to the Las Vegas casinos and personal bank accounts of individuals related to the 1MDB worldwide scandal, according to the lawsuit.
According to the Ministry of Justice, the Malaysian financial Jho under, investigators consider a central figure in the alleged fraud of 1MDB, cabled $ 148 million, a Swiss bank account to the company joint account Shearman & Sterling LLP at Citibank in New York in October 2009.
Four months later, four bank checks totaling about $ 22 million were issued from the lawyer's account to pay for a condominium in Laurel Park next to Central Park in Manhattan, according to the indictment. The buyer was listed as a British Virgin Islands company named Laurel Park (NYC) Ltd.
Approximately $ 34 million for the second purchase of the apartments was transferred to the Shearman & Sterling group, according to the indictment. It was said that the money came from an account held by a Singapore-based BVI company controlled by Mr. Aziz.
Then a joint account wire Shearman & Sterling has sent a similar amount of money to a trust account from another law firm, Sullivan & Cromwell LLP.
The Sullivan & Cromwell account, held also at Citibank, then wired $ 34 million from a Swiss bank account Rothschild Bank AG to pay Mr. Low, said the prosecutor.
The Justice Department prosecution said that the money for both condominium purchases was stolen from 1MDB. The indictment indicates that the companies controlled by Mr. Low and Mr. Aziz sent a total of $ 489 million in a joint Shearman & Sterling account from abroad.
Asset seizure proceedings are civil actions against property itself, and do not include individuals as defendants.
MM. Baja and Aziz denied the allegations in the case of 1MDB.
Neither Citibank nor the law of the lawyers of the United States are accused of misconduct. A spokeswoman for Shearman & Sterling said he agreed with legal and ethical standards and had no reason to believe the funds could have been stolen. Citibank and Sullivan & Cromwell did not comment.
According to Randall Berg, a Florida public interest lawyer who helped establish collective notification systems in several states to generate interest in paying civil legal aid. At present, 46 states and the District of Columbia require law firms to use these accounts.
An approximate estimate of the amount of money passing through them is possible the amount of interest they generate, which was $ 78 million in 2015, according to an ABA repository of information. In five major states after the data accounts, banks pay an average interest rate of 0.21% on them. These figures indicate that at the national level, shared accounts of law firms had an average balance of at least $ 36 billion during the year.
Since money is often in them for only a few days or weeks, however, the amount that flows in a year could be much higher. The figures suggest that if the money was insured for three months on average, about $ 146 million was transferred in a year, and if the money is returned every month, the total exceeds $ 400 billion.
The beads seem to swell. In the five major states that control the balance - California, New York, Texas, Florida and New Jersey - accounts for collective bargaining law firms about $ 20 million last year pooled, up 32% on that of 2012. Property sales, including luxury properties, say some lawyers.
Confidentiality of bank accounts, in general, has become a major problem after the terrorist attacks of September 11, 2001, when the government increased oversight of the financial system. The legal industry has fought hard to avoid being swept away in extending rules of the fight against money laundering beyond bankers to other professions.
Stephen Saltzburg, a law professor at George Washington University and a member of the governing body of the ABA, called the point of view of standards requiring lawyers to turn clients into "the most alarming threat of lawyer-client privilege to anyone Saw a long time ". "He led to the adoption of a resolution against ABA them.
This year the ABA was able to make trust group accounts exempt from new federal rules requiring financial institutions to know the beneficial owners of accounts that are in the name of legal entities such as corporations fictitious. Richard Gordon, a law professor at Case Western Reserve University and a former money laundering expert at the International Monetary Fund, said: "People can circumvent the requirements by sending money into their attorney accounts for short periods.
American lawyers are faced with rules that require them to keep funds from client records and to prohibit their assistance to knowingly conduct illegal conduct. Investigators can ask law firms to reverse grouped account records related to a case. Voluntary guidelines for ABA attorneys to identify and prevent money laundering.
US lawyers did not investigate client behavior unless they believe that a client may engage in any illegal activity while using the lawyer's services, contrary to the requirements of other developed countries. In situations where a US attorney learns that a client engages in harmful activity, state regulations vary depending on whether it would be necessary for the lawyer to report to the government, Hal Lieberman said, the ethics of New York's legal counsel .
Other lawyers said that if lawyers could persuade these clients to adhere to the law or end potentially illegal activity, they should stop representing the client or the risk of being seen as facilitator ille activity
