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U.S. and U.K. International Business Transactions, Money Transfers and Money Laundering

Posted on September 30th, 2010 | Author: Ted Margolis

The current economic problems have created a great deal of activity in the business crimes area. When economies have problems, there are always two phenomena that occur. First, there is more regulation and legislation to prevent future business defalcations and there are more indictments of business persons for white collar crimes. This economic downturn is no exception.

The United Kingdom has passed legislation similar to the U.S. Foreign Corrupt Practices Act (“FCPA”). In fact, the U.K. legislation may be broader in scope than the FCPA. The Bribery Act of 2010, according to the Ministry of Justice, “….provide[s] a new, modern and comprehensive scheme of bribery offenses and enable[s] the courts and prosecutors to respond more effectively to bribery at home and abroad.”

The European Court of Justice recently confirmed prior case law that an in-house corporate lawyer receiving communications from other corporate employees, officers or directors or third persons does not create an attorney-client privilege. This means that communications with in-house counsel will not be protected from discovery.

In the U.S., there has been a great deal of case law surrounding in-house legal counsel and the attorney-client privilege. Although U.S. courts have generally carved away some of the privilege protections for communications with in-house lawyers, the privilege still does exist in the U.S. But the analysis is factually complex. To simplify, if in-house counsel is acting in a primarily business role, as opposed to a legal role, the courts have generally found that the privilege does not apply simply because a lawyer is part of the conversation or communication.

In the criminal context, business executives must be mindful of what lawyer they can talk to and whether their discussions are protected or subject to discovery.

Because of the threat of terrorism, federal authorities are concentrating on money laundering and money transfers. U.S. companies working with transfers of funds through or from various countries must be cognizant of the fact that the U.S. and other governments are looking closely at these transfers. In the U.S., the applicable statutes are 18 U.S.C. §§ 1956 and 1957, et seq. Innocent business transactions can often trigger reporting requirements and disclosure. It is, therefore, important for companies working with overseas entities to know the money transfer rules, regulations and laws before moving money or equivalents through international markets.

Finally, look for the Congress to pass legislation to patch up the recent rulings of the Supreme Court on the “honest services” criminal statute, 18 U.S.C. Section 1346 which included in the mail and wire fraud definitions a scheme or artifice to “…deprive another of the intangible right of honest services.” The Court recently found that the “honest services” language that Stephen Skilling, former President of Enron, and Conrad Black and others were convicted of violating was unconstitutionally vague. This statute has been used by the government in scores of business and political related fraud cases where the government’s proofs of mail or wire fraud are weak. “Honest services” was a tool Department of Justice liked and used frequently and they are pushing Congress to write a new statute that will give the Department of Justice more flexibility in pursuing business crimes.