Using Lawyers to Launder Money

In 2014, the anti-corruption group Global Witness sent an undercover investigator into 13 New York law offices, and it made the recordings public in 2016. He said he represented a West African minister of mines who had built a fortune from payments by mining companies and wanted to move it quietly into the United States to buy a brownstone, a jet, and a yacht. In almost every meeting the lawyers kept talking. Several went further and sketched out how the money could be hidden.

In this TalksOnLaw interview, Joel Cohen sits down with Professor William H. Simon of Columbia Law School, one of the country's leading scholars of legal ethics. Global Witness asked him to review the sting recordings. He explains what the lawyers did wrong, why the law does not let a lawyer avoid a problem by avoiding the facts, and how the profession's confidentiality rules sit uneasily beside international anti-money-laundering standards.

What Money Laundering Is

Simon defines money laundering as any effort to hide the link between assets and illegal activity. Someone holding criminal proceeds, or money meant for a crime, has them in a form or place that is unsafe or suspicious and wants them somewhere safer and less noticeable. He explains that the United States draws this business because it pairs sophisticated corporate law with the ability to form entities without disclosing who really owns them.

Inside the Global Witness Sting

Simon reviewed five of the 13 recordings. Of all 13, only one lawyer heard the pitch and showed the investigator out. In four of the five Simon watched, the lawyers actively marketed themselves. They described layered shell companies owning other companies, routing funds through jurisdictions with strong bank secrecy and weak oversight, and in some cases passing the money through their own client trust accounts. None of them insisted on learning the minister's name, his country, or what the payments were actually for.

Rule 1.2(d) and the Prospective Client

In a report co-written with Professor John Leubsdorf of Rutgers, Simon concluded that lawyers in three of the interviews had fairly clearly violated Model Rule 1.2(d), which bars a lawyer from counseling or assisting a client in conduct the lawyer knows is criminal or fraudulent. He takes on two objections. The first is that the "minister" was only a prospective client. Simon's answer is that equipping a prospective client to commit a crime does the same harm as equipping an actual one. The second is the knowledge requirement.

Why Willful Blindness Won't Work

Simon gives three reasons a lawyer cannot stay safe by asking as few questions as possible. Federal criminal law lets a jury infer knowledge when a defendant deliberately ignored obvious warning signs. The lawyer also owes the client a duty to explain when a plan carries criminal exposure, and that duty was badly neglected in these meetings. Finally, competent advice requires due diligence, and no one can give sound advice without first learning the relevant facts.

Confidentiality and the Duty to Report

The Financial Action Task Force, an intergovernmental body the United States belongs to, calls for professionals, lawyers included, to perform due diligence, report suspicious activity, and not tell clients they have done so. U.S. banks follow those rules. U.S. lawyers do not, and the country has been rated non-compliant on that point. Under state ethics codes, disclosure to prevent a client's crime is usually permitted rather than required, and the rules vary widely. New York allows it; California is far more restrictive.

Lessons from the Panama Papers

Simon draws two lessons from the leak of a Panamanian law firm's files. Clients who pay for secrecy cannot count on it, because every organization carries the risk of an insider who decides to disclose. The bigger lesson goes to why lawyers get privilege at all. Society protects legal confidentiality on the theory that legal advice makes people more likely to obey the law. The sting and the leak both showed lawyers doing the reverse.

Red Flags and a Risk-Based Approach

Simon describes the risk-based approach that the FATF and the ABA's voluntary guidance share. Warning signs include wealth out of proportion to a client's job or business, an unexplained demand for secrecy, cash-heavy industries such as casinos, and high-risk geography. When enough of them appear, the lawyer must dig in: verify identity, check references, run an OFAC screen, and obtain a plausible, substantiated business reason for the transaction and for any secrecy. If the project turns out to be illegal, the lawyer tells the client plainly what cannot be done and can end the relationship.

Reforms Worth Considering

Simon wants the rules to say outright what he thinks they already imply: that Rule 1.2(d) covers prospective clients, requires due diligence, and calls for a clear statement that the lawyer will not help with illegal conduct. He also floats a narrower alternative to suspicious-activity reporting that would require disclosure only of known, ongoing, or planned client crimes. He closes with the ethics of the sting itself, including secret recording that is lawful in New York but not in Delaware.

What to Know Now

Much of what Simon asked for has since arrived. In April 2020 the ABA issued Formal Opinion 491, which confirms that Rule 1.2(d) reaches willful blindness and that a lawyer who sees a high probability of client wrongdoing must inquire before helping. In August 2023 the ABA House of Delegates amended Model Rule 1.16(a) to state that "a lawyer shall inquire into and assess the facts and circumstances of each representation" to decide whether to take it on or continue. New comments build that into a continuing, risk-based duty and point lawyers to FATF and Treasury guidance on red flags. States are now deciding whether to adopt the change.

The transparency rules Simon described have followed a more winding path. Congress passed the Corporate Transparency Act in 2021 to require disclosure of beneficial owners, which went directly to the anonymity problem the sting exposed. FinCEN later exempted U.S. companies and U.S. persons, first by an interim rule in March 2025 and then by a final rule that took effect in August 2026. Supporters of the rollback point to the compliance burden on millions of small businesses. Critics say it reopens the door the Act was meant to close. FinCEN's rule requiring reports on all-cash, non-financed transfers of residential real estate to entities and trusts was vacated by a federal court in Texas in March 2026, and the government has appealed. Proposals to extend anti-money-laundering duties to lawyers and other "gatekeepers," such as the ENABLERS Act, have been introduced but not enacted. The United States is due for its next FATF mutual evaluation, and the professions have been among its weakest-rated areas. For practitioners, the professional duty to inquire is now firmer than it was when Global Witness ran its sting, even as the federal disclosure regime around it has loosened.