Ask why ABA opposes bipartisan anti-money laundering guidelines earlier than renewing your membership

There are over 1.3 million active practicing lawyers in the United States. Whenever an organization tries to speak for such a large group of people, there will necessarily be some level of dissent within the ranks.

Even so, when I opened the print version of the Wall Street Journal last weekend (yes, I know, old school), I raised an eyebrow to learn that the American Bar Association was one of the few remaining groups that had a seemingly important one Stand in the way of bipartisan anti-money laundering legislation. According to the Wall Street Journal – fairly trustworthy for such things – “many illicit finance experts” say this legislation would fill “one of the biggest loopholes in US anti-money laundering regulations.” Could resistance to such a measure really serve the interests of the ABA?

Proponents have struggled with so-called beneficial ownership laws for decades, but have previously been hampered by powerful interest groups including the ABA and the U.S. Chamber of Commerce. Under current law, companies are not required to report the real owners who benefit from the business effort. The new measure would create a register in the finance department open to law enforcement, but not the public, and oblige companies to hand over the real identities of company owners (who were previously allowed to remain anonymous). The U.S. Chamber of Commerce recently suspended its opposition to the measure after Congressmen raised the chamber’s privacy concerns. The Chamber now supports the pending beneficial ownership legislation.

This makes the ABA one of the few large advocacy organizations that still speak out against the legislation on beneficial ownership. Now the ABA has been quick to point out that other groups are against these new reporting rules, namely a number of small business groups. In a 2019 letter to lawmakers, the ABA President pointed out three other reasons the ABA allegedly opposes beneficial ownership legislation: it would impose burdensome regulatory requirements on small businesses, raise small businesses, and what would be referred to as beneficial owners privacy concerns. The federal reporting obligations for beneficial ownership are duplicate and unnecessary (which, strictly speaking, is not the case).

The American Bar Association does not purport to serve its members only, but “equally” considers the public and the profession as a whole:

Our mission is to serve our members, our profession, and the public alike by defending freedom and creating justice as national advocates of the legal profession.

Every patriotic American foregoes a small business flag from time to time, but giving basic details like name, date of birth, and address to the people who actually benefit from the perks of a business hardly seems like a local dojo or whatever. And it’s a little confusing to me why the ABA wants to continue this fight now that the US Chamber of Commerce is on board. I don’t see any “small business owners” on the ABA mission statement (although some ABA members and members of the public are certainly small business owners, it is no longer the mission to advocate this subset of groups than to promote the interests of dungeon masters, Instagrams or other different subgroups within the groups that the ABA wishes to serve). The ABA has raised a number of other concerns about this type of legislation in two decades of opposition, including that it would allegedly undermine the confidentiality of the attorney-client relationship, but the latest proposal does not include new rules specifically for attorneys (or even attorneys) mention).

Could part of the ABA’s concern really be that beneficial ownership legislation would cost some lawyers a business? For example, when founding companies that do not have to tell the federal government from whom they benefit?

In any case, Mitch McConnell has promised that, despite a Trump veto threat, the Senate will pass the annual defense bill that includes the new anti-money laundering measure. The first forerunner laws were passed in both chambers of the Congress with a non-partisan, veto-proof majority.

Democrats and Republicans can’t agree on much. But if they can agree that money laundering is bad and that move will help prevent it from happening (and if Trump apparently opposes it, another surefire indicator of good policy), maybe it is the ABA that was wrong.

Jonathan Wolf is a litigation attorney at a medium-sized, full-service firm in Minnesota. He also teaches as Associate Professor of Writing at the Mitchell Hamline School of Law, has written for a variety of publications, and makes it a business and a pleasure to be financially and scientifically literate. Any views he expresses are likely pure gold, yet only his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the loan anyway. He can be reached at jon_wolf@hotmail.com.

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