Regulating the Lawyer-Enablers of Russia’s War on Ukraine

Details

Author(s):
  • Erik G. Jensen
  • Kyrylo Korol
  • Sarah Manney
  • Katherine Viti
  • Lexi Curnin
  • Bryce Tuttle
  • Nathaniel Quigley
  • Tengqin (Max) Han
  • Garrett Walker
  • Frishta Quigley
  • Danny Sharp
  • Gabriel Bernardes
  • Moira Lieto
  • Gretchen Knaut
Publish Date:
May 1, 2024
Format:
Report
Citation(s):
  • Erik Jensen, Kyrylo Korol, Sarah Manney, Katherine Viti, Lexi Curnin, Bryce Tuttle, Nathaniel Quigley, Tengqin (Max) Han, Garrett Walker, Frishta Qaderi, Danny Sharp, Gabriel Bernardes, Moira Lieto, Gretchen Knaut, Rani Chor, Regulating the Lawyer-Enablers of Russia’s War on Ukraine, Stanford Law School Law and Policy Lab, 2023-24 Spring (Policy Practicum: Regulating Professional Enablers of Russia’s War on Ukraine (Law 809M); Teaching/Supervising Team: Erik Jensen.
Related Organization(s):

Abstract

Lawyers represent a significant threat to the integrity of the U.S. sanctions regime. This report analyzes that threat in the context of Russia’s aggressive war against Ukraine. Sanctions, particularly individual sanctions, are a central weapon in the United States’ national security arsenal. This report recommends that Congress, federal agencies, and state bar associations implement a comprehensive regulatory regime for lawyers engaging in certain transactional work to ensure U.S. lawyers are no longer enablers of sanctions evasion.

This report recommends amending the Banking Secrecy Act (BSA) to subject financial transactional work completed by lawyers to the same anti-money laundering and anti-sanctions evasion requirements to which banks are subject. Lawyers would be required to verify the true identity of their clients when completing financial transactions on their behalf and file reports with the government on suspicious client activity. This requirement would prevent oligarchs from gaming the U.S. anti-money laundering (AML) system by using lawyers instead of banks for these transactions. Congress must also fully fund the agencies that would implement this new law: the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the Department of Justice (DOJ). FinCEN must issue comprehensive rules clarifying lawyers’ obligations under the BSA, and OFAC must amend its regulations to plug a critical gap in the current sanctions implementation framework. Finally, state bar associations must require that lawyers be trained on their new obligations.

This report begins with a description of the problem: oligarchic wealth, how that wealth supports Putin’s regime, and how U.S. lawyers enable sanctions evasion (Part I). It then gives an overview of the current regulatory landscape (Part II). Next, it presents how six other countries regulate lawyers as potential enablers of sanctions evasion and other crimes, including money laundering (Part III). Finally, it proposes a comprehensive legislative and regulatory regime to solve the lawyers-as-enablers problem (Part IV).