December 26, 2016
Tens of billions of dollars every year move through opaque law-firm bank accounts that create a gap in U.S. money-laundering defenses, according to a Wall Street Journal analysis. These accounts were used by suspects in a multibillion-dollar scandal involving a Malaysian state investment fund known as 1MDB, according to a Justice Department description of events. They also played a part in a Florida Ponzi scheme, in a case related to an official of Equatorial Guinea and in a dozen other U.S. money-laundering cases over the past decade, case records show.
Law firms lump together client money they are holding for short periods, such as while real-estate sales are pending, into pooled bank accounts, and the law firms face no requirement to disclose whose cash is in the accounts. Banks say they generally see only a law firm’s name.