The AML Framework and the Gatekeeper Rule

The Statutory Foundation: The Bank Secrecy Act of 1970

The Bank Secrecy Act (BSA), codified at 31 U.S.C. §§ 5311-5330, established the foundational architecture for U.S. anti-money laundering enforcement. Congress enacted the BSA in 1970 to require financial institutions to maintain records and file reports that have "a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings." The Act granted the Secretary of the Treasury broad authority to issue regulations requiring financial institutions to file currency transaction reports (CTRs) for transactions exceeding $10,000 and to maintain records that facilitate the reconstruction of transactions.

The Supreme Court upheld the constitutionality of the BSA in California Bankers Ass'n v. Shultz (1974), rejecting Fourth and Fifth Amendment challenges. The Court held that the recordkeeping and reporting requirements did not constitute an unreasonable search or compel self-incrimination because the records belonged to the banks, not to individual account holders. This decision cleared the path for decades of incremental expansion of the BSA framework.

The USA PATRIOT Act of 2001 significantly amended the BSA, adding Title III — the International Money Laundering Abatement and Anti-Terrorist Financing Act. Section 352 of the PATRIOT Act required financial institutions to establish anti-money laundering programs, including policies, procedures, and controls reasonably designed to detect and report suspicious activity. Section 326 mandated customer identification programs (CIP), requiring institutions to verify the identity of persons opening accounts. These amendments transformed the BSA from a recordkeeping statute into a comprehensive regulatory framework demanding active compliance infrastructure.

FinCEN's Delegated Authority and Rulemaking

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, administers the BSA and issues regulations defining which entities qualify as "financial institutions" subject to BSA obligations. FinCEN's authority extends beyond traditional banks to include money services businesses, casinos, dealers in precious metals and stones, and certain other industries.

FinCEN regulations require covered financial institutions to file Suspicious Activity Reports (SARs) when they detect transactions that may involve money laundering, terrorist financing, or violations of federal law. 31 C.F.R. § 1020.320 establishes the SAR reporting thresholds and procedures for banks, while parallel provisions govern other financial institution types. SARs must be filed within 30 days of the initial detection of facts that may constitute a basis for filing, with an extension to 60 days if no suspect is identified.

The anti-tipping provision of 31 U.S.C. § 5318(g)(2) prohibits financial institutions and their employees from disclosing that a SAR has been filed or that suspicious activity is under investigation. Violations carry civil and criminal penalties. This provision creates a fundamental tension when attorneys represent clients who are the subject of SAR filings: the attorney may have no knowledge that law enforcement has received a report about their client's transactions.

The Gatekeeper Rule: Extending AML Obligations to Attorneys

On August 25, 2021, FinCEN issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment on whether to establish AML program and reporting requirements for certain non-financial trades and professions, including attorneys. The proposed "Gatekeeper Rule" would require attorneys to implement AML compliance programs and file SARs when acting in specific capacities.

The ANPRM identified six categories of covered activities: forming legal entities or arrangements, acting as formation agents or providing a registered office address, buying and selling real estate, managing client funds or assets, managing bank or securities accounts, or organizing contributions for the creation or operation of companies. Notably, these activities focus on transactional and business formation work, not traditional litigation or advisory roles.

FinCEN's proposal drew immediate opposition from the American Bar Association and state bar associations, which argued that imposing SAR filing obligations on attorneys would violate attorney-client privilege, undermine the Sixth Amendment right to counsel, and contradict the attorney's duty of loyalty to the client. The ABA's August 2022 comment letter emphasized that attorneys already operate under professional conduct rules that prohibit assisting client fraud or illegal activity, and that Rule 1.2(d) of the Model Rules of Professional Conduct prohibits lawyers from counseling or assisting in conduct the lawyer knows is criminal or fraudulent.

Despite these objections, FinCEN has indicated that some form of the Gatekeeper Rule will move forward. The agency pointed to a 2016 Geographic Targeting Order (GTO) requiring title insurance companies to report certain high-value, all-cash real estate purchases, which revealed significant concealment of beneficial ownership through shell companies. FinCEN's analysis suggested that attorneys facilitating these transactions often had material information about beneficial ownership but no regulatory obligation to disclose it.

The FATF Standards and International Pressure

The United States is a founding member of the Financial Action Task Force (FATF), an intergovernmental organization established in 1989 to combat money laundering and terrorist financing. FATF's Recommendations, revised most recently in 2023, set international standards for AML compliance. Recommendation 22 specifically addresses designated non-financial businesses and professions (DNFBPs), including lawyers, notaries, accountants, and trust and company service providers.

Under FATF Recommendation 22, lawyers should be subject to AML obligations when they prepare for or carry out transactions for clients concerning buying and selling real estate, managing client money or securities, managing bank or savings accounts, organizing contributions for the creation or operation of companies, or creating, operating, or managing legal persons or arrangements. FATF also recommends that lawyers file suspicious transaction reports, subject to appropriate protections for legal professional privilege.

The FATF conducts mutual evaluation reviews of member countries to assess compliance with its standards. In its 2016 mutual evaluation of the United States, FATF assigned the U.S. a rating of "partially compliant" on Recommendation 22, specifically citing the absence of AML obligations for DNFBPs, including lawyers. This international pressure has been a significant driver behind FinCEN's efforts to extend the BSA framework to attorneys.

The Legal Professional Privilege Defense

Opponents of the Gatekeeper Rule argue that AML reporting obligations would violate the attorney-client privilege, which protects confidential communications between attorneys and clients made for the purpose of obtaining legal advice. The privilege is both a constitutional protection and a rule of evidence, codified in Federal Rule of Evidence 501 and recognized in all U.S. jurisdictions.

However, the privilege is not absolute. The crime-fraud exception provides that the privilege does not apply when a client seeks legal advice to further a crime or fraud. In United States v. Zolin (1989), the Supreme Court held that in camera review of materials is permitted when a party makes a prima facie showing that the crime-fraud exception applies. This exception could theoretically permit SAR filings for transactions that an attorney reasonably suspects involve criminal activity, though the practical application remains contested.

FinCEN has suggested that the Gatekeeper Rule would include carve-outs to protect privileged communications and that reporting obligations would apply only to transactional activities, not to litigation representation or legal advice. The ABA counters that this distinction is unworkable in practice, as attorneys routinely provide legal advice while facilitating transactions, and that any duty to report would chill clients' willingness to seek legal counsel.

Enforcement Mechanisms and Penalties

If FinCEN finalizes the Gatekeeper Rule, attorneys subject to AML obligations would face the same enforcement mechanisms that apply to other financial institutions. Civil penalties for BSA violations range from $500 to $100,000 per violation under 31 U.S.C. § 5321, with no cap on the total penalty amount. Willful violations carry criminal penalties of up to $250,000 and five years' imprisonment under 31 U.S.C. § 5322.

FinCEN has demonstrated a willingness to impose substantial penalties on financial institutions that fail to maintain adequate AML programs. In 2020, FinCEN assessed a $390 million civil penalty against a bank for willful violations of the BSA, including failures to file SARs on suspicious transactions totaling billions of dollars. The agency's aggressive enforcement posture suggests that attorneys subject to AML obligations would face significant compliance risks.

The Current State of Play

As of early 2025, the Gatekeeper Rule has not been finalized. FinCEN has continued to issue GTOs targeting specific high-risk transactions, and the agency has stated that rulemaking remains a priority. Attorneys engaged in transactional work, particularly those forming entities for clients or handling large real estate transactions, should monitor developments closely.

Prudent law firms are beginning to implement voluntary AML-adjacent compliance measures, including enhanced client due diligence for high-risk transactions, documentation of beneficial ownership information, and policies prohibiting acceptance of large cash payments. While these measures do not carry regulatory force in the absence of a final rule, they reflect a recognition that the regulatory landscape is shifting and that attorneys who facilitate certain transactions may soon operate under obligations similar to those imposed on financial institutions.