Finance

Ask Why ABA Opposes Bipartisan Anti-Money Laundering Rules Before Renewing Your Membership

Could opposition to such a measure really serve the interests of the ABA?

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There are over 1.3 million actively practicing attorneys in the United States. Whenever an organization tries to speak on behalf of such a large group of people, there is necessarily going to be a certain level of dissent within the ranks.

Even so, when I unfolded the print edition of the Wall Street Journal this past weekend (yeah, I know, old school), I couldn’t help but raise an eyebrow when I learned that the American Bar Association was one of the few remaining groups standing in the way of seemingly important bipartisan anti-money laundering legislation. According to the Wall Street Journal — pretty trustworthy, as to such things — “many illicit-finance experts” say that this legislation would plug “one of the biggest holes in U.S. anti-money-laundering rules.” Could opposition to such a measure really serve the interests of the ABA?

Proponents have sought so-called beneficial-ownership legislation for decades, but had previously been stymied by powerful interest groups, including the ABA and the U.S. Chamber of Commerce. Under current law, companies are not federally compelled to report the true owners who benefit from business efforts. The new measure would create a registry at the Treasury Department, accessible by law enforcement but not the general public, and would require companies to hand over the true identities of company owners (who had previously been allowed to remain anonymous). The U.S. Chamber of Commerce recently dropped its opposition to the measure, after congresspeople addressed the Chamber’s privacy concerns. The Chamber now supports the pending beneficial-ownership legislation.

Which leaves the ABA as one of the few large advocacy organizations still opposing beneficial-ownership legislation. Now, the ABA has been quick to point out that other groups are opposed to 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 why the ABA purportedly opposes beneficial-ownership legislation: it would impose burdensome regulatory requirements on small businesses, it would raise privacy concerns for small businesses and those designated as beneficial owners, and federal beneficial ownership reporting requirements are duplicative and unnecessary (which isn’t, strictly speaking, true).

The American Bar Association doesn’t purport to serve only its members, but also “equally” takes into account the public and the profession as a whole:

Our mission is to serve equally our members, our profession and the public by defending liberty and delivering justice as the national representative of the legal profession.

Any patriotic American waives the small business flag from time to time, but reporting basic details like name, date of birth, and address for the people who are actually reaping the benefits of a business hardly seems like it would be crushing to a local dojo or whatever. And it’s a little confusing to me why the ABA wants to carry on this fight anyway now that the U.S. Chamber of Commerce is on board. I don’t see “small business owners” on the ABA mission statement (although surely some ABA members and members of the public are small business owners, advocating for that subset of the groups isn’t the mission any more than it is to promote the interests of dungeon masters, Instagrammers, or any other distinct subsets within the groups the ABA seeks to serve). The ABA has raised a bunch of other concerns with this type of legislation over two decades of opposition, including that it would supposedly impact the confidentiality of the attorney-client relationship, but the latest proposal doesn’t impose any new regulations specifically on lawyers (or even mention lawyers, for that matter).

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Could part of the ABA’s concern really be, just maybe, that beneficial-ownership legislation would cost some lawyers some business? Like maybe in setting up businesses that don’t have to tell the federal government who they’re benefiting?

At any rate, Mitch McConnell has promised that the Senate will pass the annual defense bill which contains the new anti-money laundering measure, despite a Trump veto threat. The initial precursor bills passed in both chambers of Congress with bipartisan veto-proof majorities.

There’s not much that Democrats and Republicans can agree on. But if they can agree that money laundering is bad and this measure will help prevent it (and if Trump is apparently opposed, another surefire marker of good policy), perhaps it is the ABA that’s been wrong.

Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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