Attorney-client privilege shouldn’t help oligarchs evade Russia sanctions

An obvious principle in the attorney-client relationship is that lawyers should not help their clients break the law. Yet this basic idea is under attack in our country by lawyers themselves. And the victims are taking cover in Ukrainian bomb shelters.

Thanks to strong confidentiality shields in our legal system, some U.S. lawyers are weaponizing their privileges to enable kleptocrats and oligarchs’ worst abuses. Not all lawyers engaging in these practices may be aware of the ramifications of their actions. But the impact is the same.

Unlike most attorneys engaging in this conduct, Manhattan lawyer Robert Wise knew exactly what he was doing. Wise got a new client in 2008, Vladimir Voronchenko, a Russian citizen and U.S. green card holder. A steward of the arts, he was the founding director of St. Petersburg’s Faberge Museum, which housed the art collection of his childhood friend, Russian billionaire Viktor Vekselberg. 

Voroncheneko had a seemingly simple request for his new lawyer: Buy property for his friend. Wise obliged, transferring money from a shell company he knew Vekselberg owned to purchase an $11 million Park Avenue condo.  

Over the next 10 years, Wise used funds from Vekselberg’s shell company to maintain the Park Avenue condo. To ensure privacy, Wise funneled funds through his client’s trust account — an account not subject to the same reporting rules that apply to normal bank accounts. 

By 2018, Russia was four years into its initial invasion of Ukraine. Faced with growing Russian aggression, the U.S. sanctioned Vekselberg due to his close ties to the Putin regime. Today, Vekselberg’s company provides key inputs for Vladimir Putin’s war machine.  

When the 2018 sanctions banned Wise’s transactions, Voronchenko had an easy fix: switch shell companies and use a new one that didn’t have Vekselberg’s name on the paperwork. Wise did not report the obvious suspicion that this act was intended to conceal the evasion of sanctions.

Last year, Wise pleaded guilty to helping Vekselberg evade sanctions. This makes Wise an outlier. Because lawyers are not required to do even minimal due diligence on their clients, they usually avoid prosecution. 

Wise admitted he had been suspicious that Vekselberg was behind this new company. But if Voronchenko had simply not told Wise that Vekselberg was behind the original 2008 purchase, Wise would have been under no obligation to draw the obvious connection to the sanctioned billionaire or report his suspicions.

Lawyers like Wise are part of a broader ecosystem of “enablers,” Western professionals including lawyers, accountants and wealth managers who help oligarchs stash their wealth in other countries like the U.S.

Whereas banks are required are required to check for signs their clients might be laundering money or committing other crimes, and to report their suspicions to the federal government, these legal professionals are not. Other professionals do not need to report these suspicions, either. But lawyer-enablers benefit from a unique legal shield to protect their client and themselves, because confidentiality rules allow them to shield evidence of client misdeeds from authorities.  

A bipartisan bill, the ENABLERS Act, would have addressed this issue with a simple solution: Subjecting lawyers engaging in transactions like the ones Wise conducted to the same due diligence and reporting requirements to which banks are subject. However, the legislation failed in 2022, partly due to opposition from the American Bar Association. which worried that the bill would damage the principle of client confidentiality. 

At the request of the International Working Group on Russia Sanctions, our team at Stanford Law School evaluated the American Bar Association’s claim in detail and published our findings in a report last month, “Regulating the Lawyer-Enablers of Russia’s War on Ukraine.” 

Our conclusion is clear: To prevent U.S. lawyers from becoming knowing or unwitting agents of Putin’s cronies, the U.S. must subject lawyers to basic anti-money-laundering safeguards, and it can do so without harming the legal profession. 

Canada, Britain, Germany, South Africa, Brazil and the United Arab Emirates all impose substantial client due diligence obligations on lawyers conducting financial transactions for their clients. And of those countries, only Canada does not require lawyers to file reports on suspicious client financial activity. It is long past time for America to join its peers.  

Attorney-client confidentiality should be strong for criminal and civil representation. But it becomes less justifiable when attorneys carry out the same activities as accountants. 

Robert Wise was not acting as a lawyer but as a bagman, yet he benefited from his profession’s unique privileges. This must change. Lawyers should only benefit from legal safeguards when they are actually acting as lawyers. 

Lawyers should not be allowed to ignore the effects of their actions. All lawyers have a duty to their clients but they also have a duty to protect the rule of law. Congress should enforce that duty by passing the ENABLERS Act.

Erik Jensen is the director of the Stanford Law School Rule of Law Program. Bryce Tuttle is a J.D. candidate at Stanford Law School and a coauthor of the report “Regulating the Lawyer-Enablers of Russia’s War on Ukraine“