Sunday, June 5, 2016

Panama Lessons ("On business intake" or "Be careful with those clients, Eugene...")

"Law Firms Look for Lessons—and Clients—in Panama Papers Leak" --
  • "While many firms are getting updates and looking for opportunities in the wake of the leak, at least one, Sheppard, Mullin, Richter & Hampton, has formally set up a multipractice group devoted to Panama Papers-related developments."
  • "At least 30 Am Law 100 firms, including some that no longer exist, and dozens of other law firms around the world appeared in the searchable database that was published Monday by the ICIJ. The firms and other entities listed came from the Panama Papers leak and a separate ICIJ investigation from 2013."
  • "Regardless of whether they appear in the database, law firms should view the Panama Papers as a wake-up call, said Hinshaw & Culbertson professional liability partner Janis Meyer. 'Firms would be well served to take this opportunity to review their client intake procedures,' Meyer said. While large firms typically do have systems in place to alert them if a potential client has been flagged by a law enforcement agency, every jurisdiction has its own rules regarding what kind of due diligence is mandatory."
  • "In the U.K., for example, 'there are procedures to ensure that you know your client,' said Meyer, who was general counsel at Dewey & LeBoeuf before the firm went bankrupt in 2012. 'We don’t have any mandatory procedures for that here [in the U.S.], but good lawyers do it.'"
"Panama Papers spotlight danger of failing to screen for problem clients" --
  • “But the Panama Papers also shine a light on some failures of Mossack Fonesca to screen out problematic clients — failures of due diligence that the firm itself recognized.”
  • “One case in point is Petropars Ltd., which the ICIJ described as an Iranian-government- controlled intermediary between foreign companies and Iran’s oil ministry.  Through its offices in Dubai and London, Petropars was also a player in the development of Iran’s multibillion-dollar South Pars natural gas field.”
  • “Mossack raised the alarm in an internal e-mail addressed to the firm’s “Compliance Department,” among others.  He wrote “This is dangerous! … Everybody knows that there are United Nations sanctions against Iran and we certainly want no business with regimes and individuals from such places.”
  • “He called into question how Petropars had been vetted as a firm client to begin with, and blasted the firm’s United Kingdom office:  ‘It would appear Mossfon UK are not doing their Due Diligence [sic] thoroughly (or maybe none at all), and maybe from now on we ourselves will have to do the DD on all clients that Mossfon UK have with us, present and future!’
  • “Mossack wrote that ‘Anybody having had to do anything with this company [sic], … should have realized immediately that the names associated with it were Iranian names.  A red flag should have been raised immediately.’ The firm resigned as Petropars’ registered agent in October 2010.”

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