There’s a peculiar paradox at the heart of modern legal practice: the very professionals entrusted with protecting their clients’ confidences are increasingly required, by law, to betray them. Anti-money-laundering regulations—born of earnest efforts to combat financial crime—have created a fundamental conflict between attorney-client privilege and the obligation to report suspicious transactions. This isn’t merely a theoretical quandary for law-school seminars; it’s a real and present danger to the foundational guarantees that make legal representation meaningful.
The Scope of the Problem
Under Polish law—which mirrors European Union directives—attorneys, legal counsels, and tax advisors find themselves subject to anti-money-laundering obligations whenever they provide legal assistance or tax advice involving certain transactions: the purchase or sale of real estate or businesses; the management of client funds or financial instruments; the opening of bank accounts or brokerage accounts; capital contributions to companies or increases in share capital; or the establishment and management of corporations or trusts.
The list is sweeping enough to encompass much of what lawyers do. And therein lies the trouble.
In November, 2022, I advanced a thesis: when the statutory duty to maintain attorney-client privilege meets the duty to report suspicious transactions, we encounter an irreconcilable conflict of legally protected interests. The collision is most acute when the same person serves as a “gatekeeper institution” required to report transactions and then, later, as defense counsel for a client facing charges related to those same transactions.
If we acknowledge the primacy of the constitutional right to a fair trial—and we must—then the principle becomes clear: there can be no exceptions to the prohibition on disclosing defense counsel’s confidences. But, equally, we cannot create exceptions to the rule that gatekeeper institutions must report suspicious transactions.
Here’s the bind: given the nature of attorney-client privilege, the obligation to report suspicious transactions would cease to apply once a lawyer becomes defense counsel—but, in principle, that lawyer could not be questioned about circumstances related to the transaction. This creates a scenario ripe for abuse, in which the attorney-client relationship might be exploited to shield suspicious transactions, rendering the legal advisor immune from questioning about them.
A Turning Point in European Law
In September, 2023, the Court of Justice of the European Union took up the purpose behind the so-called M.D.R. provisions—mandatory disclosure rules for tax schemes. The court concluded that, to achieve this goal, it was not necessary to impose reporting obligations on attorneys. Other intermediaries who understand clearly defined disclosure requirements are obligated to provide information to authorities, as are the taxpayers themselves.
The European Commission is now working on amendments that would exempt attorneys, legal counsels, and tax advisors covered by professional secrecy from the obligation to report tax schemes to tax authorities. The new provisions will be implemented in Poland as well.
I had flagged this issue as early as February, 2023, noting that recent years had seen a pronounced shift in the jurisprudence of the Court of Justice of the E.U. and foreign courts—a strong stance expressing decisive opposition to provisions that impose on attorneys and other professional representatives the duty to report their clients’ tax schemes.
Particularly troubling is the fact that Polish law permits a tax advisor to be released from the duty of professional secrecy—an impermissible intrusion into a privilege protected by both the constitution and statute.
Lawyers as “Professional Enablers”
In December, 2023, Transparency International published a report titled “How to Quietly Shuffle Millions of Dollars Among Four Hundred Shell Companies Spread Across Forty-one Countries.” The report demonstrated that specialists such as lawyers, accountants, and corporate-service providers played a crucial role in transnational corruption schemes.
Cross-border flows of dirty money would not be possible if corrupt officials and criminals couldn’t avail themselves of the services of entities operating worldwide. And while financial institutions—banks, primarily—have been the focus of attention for facilitating large-scale corruption and money laundering, specialists working in the non-financial sector—accountants, consultants, real-estate agents, lawyers, and corporate-service providers—have often escaped both public and regulatory scrutiny.
Corrupt officials from around the world have exploited this blind spot, employing lawyers, company-formation agents, real-estate brokers, and notaries at various stages of the process of concealing, laundering, and investing illegal proceeds.
The Rogues’ Gallery
The past few years have produced a parade of high-profile cases involving lawyers convicted of money laundering. Consider the following.
Mark Scott—The OneCoin Pyramid Scheme (United States)
Mark Scott, a former partner at the prestigious firm Locke Lord, was convicted in November, 2019, of conspiracy to commit money laundering and bank fraud related to laundering approximately four hundred million dollars from the OneCoin cryptocurrency scam. Scott created a series of investment funds in the British Virgin Islands and the Cayman Islands with offshore bank accounts, deliberately concealing the source of the funds from banks. For his services, he earned about fifty million dollars.
In January, 2024, Scott was sentenced to ten years in prison and ordered to forfeit three hundred and ninety-two million dollars, numerous bank accounts, a yacht, and two Porsches. The Second Circuit Court of Appeals upheld his conviction in 2025, and the U.S. Supreme Court declined to hear his appeal.
Kenneth Ravenell—Baltimore (United States)
Kenneth Ravenell, a Baltimore defense attorney, was convicted in December, 2021, of conspiracy to commit money laundering after using his law firm’s escrow accounts to launder more than one million dollars in proceeds from drug trafficking. Between 2009 and 2017, Ravenell provided legal and financial services to the leader of a marijuana-distribution organization, accepting drug proceeds and using his firm’s bank accounts to make payments while concealing the source of the funds.
Ravenell was sentenced to fifty-seven months in prison in June, 2022. The Fourth Circuit Court of Appeals upheld his conviction in 2023, and the U.S. Supreme Court declined to hear his appeal in 2024.
Robert Wise—Sanctions Against Russian Oligarchs (United States)
Robert Wise, a New York attorney, pleaded guilty in April, 2023, to conspiracy to commit international money laundering for assisting the sanctioned Russian oligarch Viktor Vekselberg. Wise helped a longtime Vekselberg associate make approximately $3.8 million in payments to maintain six luxury properties in New York and Florida after Vekselberg was sanctioned in 2018.
Wise received about ninety wire transfers totalling $18.5 million into his Interest on Lawyer’s Trust Account (I.O.L.T.A.) before the sanctions, and about twenty-five transfers totalling $3.8 million after. For his services, he collected nearly four million dollars. Wise agreed to forfeit more than $3.7 million.
Ross McKay—Manchester (United Kingdom)
Ross McKay, a Manchester solicitor, was sentenced in January, 2019, to seven years in prison for three counts of money laundering. McKay served as the “go-to” lawyer for a criminal gang, providing services for more than eighty real-estate transactions involving proceeds from drug trafficking, tax evasion, and mortgage fraud.
McKay facilitated transactions in which deposits from illegal sources were concealed from lenders, mortgage applications used nominees instead of actual buyers, and incomes were drastically inflated. Judge Timothy Smith observed that “McKay’s outward show of professionalism was a farce” and that he “allowed criminal property to be obtained and assisted those people in organized crime.” McKay was subsequently struck off by the Solicitors Disciplinary Tribunal.
Neil Bolton—Stockport (United Kingdom)
Neil Richard Bolton, a British solicitor, was sentenced in October, 2017, to nine months in prison for seven charges of failing to comply with money-laundering regulations and one charge of failing to disclose his suspicions. While working at the firm Harvey Roberts in Stockport, Bolton handled numerous conveyancing transactions for criminals later convicted of drug trafficking, mortgage fraud, and money laundering.
Judge Field noted that Bolton “made no serious attempt to comply with the regulations” and helped his client launder four hundred thousand pounds. Many files lacked identity documents or adequate proof of identity. Bolton was struck off in 2018.
Controversial Practical Questions
Payments from Clients Using Proceeds of Crime
In September, 2023, a complaint filed by the firm F.T.X. revealed that Sam Bankman-Fried was paying his criminal-defense attorneys millions of dollars in misappropriated F.T.X. funds. Since the F.T.X. founder had lost most of his fortune, questions arose about how he was financing his defense.
Bankman-Fried transferred ten million dollars from an F.T.X. U.S. exchange account into an account in his own name, then transferred the same amount to his father’s F.T.X. account—his father being Joseph Bankman, a professor at Stanford. This raises a fundamental question: Can a client pay a lawyer for criminal defense with funds obtained through illegal conduct?
Charges of Money-Laundering Assistance for Legal Advice
In August, 2023, a class-action lawsuit was filed in a San Francisco court against the law firm that represented the collapsed F.T.X. cryptocurrency exchange. The firm had advertised itself as being “at the forefront of the Blockchain revolution.”
The class action, however, assessed the firm’s role far more critically. The firm provided services to F.T.X. Group entities that went beyond what a law firm should provide. The lawyers were allegedly willing to devise not just creative but illegal strategies. The firm helped establish secret entities through which Bankman-Fried and F.T.X. insiders committed fraud, and advised on structured acquisitions by F.T.X. U.S. designed to circumvent regulatory oversight.
Tipping Off a Client About an Ongoing Investigation
In November, 2023, the United Kingdom’s Serious Fraud Office successfully prosecuted a legal counsel for disclosing confidential information about an investigation and falsifying a legal document to mislead investigators. This was the first lawyer charged by the S.F.O. for “tipping off” a client about a money-laundering investigation.
Lawyers have a legal obligation not to disclose details of such investigations to their clients. The lawyer also served as the firm’s Money Laundering Reporting Officer, meaning he was responsible for reporting any suspicions to authorities. Despite this, the lawyer immediately contacted the client to inform him of the investigation, then met with him multiple times over five months—including travelling to Malta to discuss the case.
The Security of Client Trust Accounts
In October, 2023, it emerged that the former head of the Axiom Ince law-firm group admitted to using client funds to finance acquisitions. Clients had entrusted the law firm with sixty-four million pounds. The money vanished.
Managing partner Pragnesh Modhwadia confirmed in a sworn statement that most of the sixty-four million pounds taken from client accounts had been spent. The money purchased six properties and financed construction work on seven others.
Simon Passfield of Axiom Ince stated that, as of June 30th, “at least” fifty-seven million pounds had disappeared from client accounts, and three additional transfers totalling seven million pounds had occurred since then. Passfield noted that the statement contained a “staggeringly frank admission” that “not a penny” had been passed on.
This case raises a fundamental question: Are client trust accounts always safe?
Record Fines for Law Firms
Clyde & Co—£500,000 (United Kingdom)
The leading London firm Clyde & Co was fined five hundred thousand pounds by the Solicitors Disciplinary Tribunal in January, 2024—the highest sum ever imposed—for money-laundering offenses. The firm admitted that, in relation to fourteen shipping transactions, it had failed to conduct adequate due diligence on the company and failed to conduct adequate ongoing monitoring.
Former partner Edward Mills-Webb was fined £11,900 for his substantial contribution to these failures. The tribunal found that the failures were “particularly egregious” because Clyde & Co was a “large and, previously, reputable firm.” This was the second major A.M.L. sanction for Clyde & Co; the firm had previously been fined fifty thousand pounds in 2017 for allowing its client account to be used as a banking facility and for breaching A.M.L. rules.
Mishcon de Reya—£232,500 (United Kingdom)
The prominent London firm Mishcon de Reya agreed to pay £232,500 in 2022—one of the largest fines ever imposed by the Solicitors Regulation Authority—for multiple A.M.L. violations. The firm admitted to failing to secure adequate due diligence for four related clients, losing evidence of due diligence conducted, providing inadequate training for the partner responsible for A.M.L. compliance, and improperly transferring funds from the client ledger.
The work involved two individual clients and related corporate vehicles between September, 2015, and April, 2017, relating to asset planning and proposed acquisitions in high-risk jurisdictions.
William Joseph Harris—Struck Off (United Kingdom)
The sole practitioner William Joseph Harris was struck off and ordered to pay costs of £29,775 in August, 2025, for “widespread and fundamental non-compliance” with money-laundering regulations over a six-year period. Between January, 2022, and September, 2023, Harris failed to conduct adequate client due diligence or source-of-funds checks for sixty-three conveyancing clients, representing £8.8 million in transaction value.
Harris admitted that he didn’t know what a firm-wide risk assessment was, despite dishonestly declaring to the S.R.A. in December, 2019, that such an assessment was in place. The tribunal found that “the firm’s vulnerability to money laundering and terrorist financing, underscored by £8.8 million in unverified funds, posed a direct threat to the integrity of the legal profession and public safety.” Harris also failed to return more than a hundred and two thousand pounds in remaining client balances to fifty-four clients.
Conclusions
The practice of recent years makes clear that regulatory authorities in the U.K. and the U.S. have significantly increased enforcement of A.M.L. provisions against legal professionals, with the S.R.A. imposing record fines and conducting far more inspections. Lawyers who actively participate in money-laundering schemes face severe criminal penalties, including lengthy prison sentences and substantial forfeitures—convictions have resulted in prison terms ranging from nine months to ten years. Lawyers who fail to report suspicious transactions or maintain adequate A.M.L. procedures expose themselves to criminal charges under statutes such as Section 330 of the Proceeds of Crime Act 2002 (U.K.) or violations of the Bank Secrecy Act (U.S.), as well as regulatory sanctions, including being struck off or facing substantial fines.
The irreconcilable conflict between professional secrecy and the duty to report remains a fundamental problem—one that requires a systemic solution from legislators, not ad-hoc interpretation by regulatory bodies. Until then, lawyers find themselves in an impossible position: guardians of their clients’ confidences and, simultaneously, informants for the state. It’s a predicament that would have troubled Kafka—and it troubles the profession still.
