This new year, the legal profession finds itself at the start of dynamic changes, shaped by evolving societal, technological, and geopolitical landscapes. The year 2024 promises to be a pivotal one for lawyers worldwide with emerging trends that demand adaptability and foresight. Technology Reshaping Legal Practice AI, AI, AI. Artificial Intelligence is everywhere. The next years will be of profound transformation due to rapid advancements in technology. Artificial intelligence, automation, and blockchain are becoming integral tools in legal research, document analysis, and contract review. LegalTech is a growing industry: in November, in the Web Summit 2023, Inspira won the Pitch Competition. Inspira works with generative artificial intelligence and uses technology to democratizing legal information to make it more accessible for everyone. Lawyers must stay abreast of these technological developments to enhance efficiency and offer clients innovative solutions. However, the rise of technology also brings forth ethical considerations and challenges related to privacy and data security, necessitating a careful balance between innovation and ethical responsibility. Remote Work and Virtual Courts: The global shift towards remote work, accelerated by the COVID-19 pandemic, continues to influence the legal sector. Law firms are embracing flexible work arrangements, and virtual court proceedings are becoming more prevalent. Lawyers need to adapt to this new normal, mastering virtual communication tools, and navigating the nuances of online hearings. Emergence of Environmental, Social and Governance and Climate-Related Legal Actions: ESG concerns have garnered significant attention, placing a growing emphasis on corporate accountability for environmental impact. A study from the Harvard Law School Forum on Corporate Governance reveals a notable increase in ESG-related shareholder proposals at Fortune 250 companies, more than doubling over the past five years. Investors and stakeholders are likely to pursue legal avenues to ensure the enforcement of sustainability commitments and to hold corporations accountable for their environmental footprint. Cybersecurity and Data Protection: With the rising frequency and sophistication of cyber threats, cybersecurity and data protection have become dominant concerns for lawyers. The legal profession is tasked with preserving sensitive client information and guaranteeing compliance with evolving data protection laws. As cyber threats evolve, lawyers and law firms must stay vigilant, adopting robust cybersecurity measures and staying informed about the latest developments in data protection regulations. Diversity, Equity, and Inclusion: The legal profession is experiencing a heightened focus on diversity, equity, and inclusion. Clients and organizations are prioritizing partnerships with law firms that demonstrate a commitment to these values. Lawyers are challenged to foster inclusive work environments, address unconscious biases, and actively promote diversity within their organizations. Sources: Legal Trends for 2024: Here's What You Need to Know!, Arpit Pahwa, in https://www.linkedin.com/pulse/legal-trends-2024-heres-what-you-need-know-arpit-pahwa-ggd8f/; Five legal trends that will dominate 2024, Dylan Brown, in https://www.lexisnexis.co.uk/blog/future-of-law/five-legal-trends-that-will-dominate-2024 Brazilian legaltech wins PITCH competition at WebSummit, Sergio Ramos in https://www.novobrief.com/a-legaltech-company-the-winner-of-pitch-competition-at-web-summit/10786/
The Anti-Money Laundering Act of 2020 (AMLA) was enacted by the U.S. Congress on January 1, 2021 as part of the National Defense Authorization Act (NDAA), for the purpose of strengthening the detection and reporting of suspicious activities related to money laundering and terrorist financing, as well as securities fraud and other market manipulation. The AMLA includes a section called the Corporate Transparency Act (CTA), which became law in 2021, and gives authorization to the Department of the Treasury through the Financial Crimes Enforcement Network (FinCEN), to implement rules directed at fighting money laundering in the United States. As a result of the enactment of the CTA, effective January 1, 2024, all existing and new companies in the United States will be required to file FinCEN reports stating and disclosing their beneficial owners. Under the CTA, a “Reporting Company” is required to file a FinCEN report with “personally identifiable information” about its beneficial owners the time of formation and annually thereafter. A “Reporting Company” is a corporation, LLC or any similar entity, created through the filing of the requisite documents with the Secretary of State of any State in the United States, or a foreign company authorized to do business in the United States. Since a foreign company is not a Reporting Company per se, the FinCEN report must include the full identity and contact information of the beneficial owner along with a valid official government issued identification document. Before the application of the CTA, shareholders and/or beneficial owners are not part of the information on the public records in the United States, and in some States, not even the managers/directors are publicly disclosed. Shareholders are only listed on the federal tax return if the entity is required to file a federal tax return, which may not necessarily mean that the beneficial owner is ever disclosed, and if no tax return is ever filed, there will be no information about the shareholders or beneficial owners of these entities. The CTA defines “Beneficial Owner” as any individual who- directly or indirectly- or through any contract, arrangement, understanding, relationship or otherwise i) exercises control over the entity; or ii) owns or controls at least 25% of the ownership interest in the entity. For Beneficial Owners, certain exceptions apply i) minor children; ii) nominees, intermediary, custodian or agent on behalf of other; iii) individual acting solely as employee and control arises solely from employment; iv) interest is through right of inheritance; and v) a creditor of the entity, unless meets the beneficial ownership rules. Non-compliance with CTA’s reporting obligations results in penalties for willful reporting violations and unauthorized disclosure violations. For the first, a civil penalty of not more than US$500 per day, a fine of no more than US$10,000 or two (2) years in prison, or both; and for the later, a civil penalty of not more than US$500 per day, a fine of no more than US$250,000 or five (5) years in prison, or both. In the event of inaccurate or involuntary mistake, if corrected within ninety (90) days from submission, no penalties shall be applied. There are certain unresolved issues related to lawyers’ responsibility with respect to the filing of FinCEN reports and the role played by lawyers in the filing of the FinCEN reports, even if they become aware of mistakes made by clients when filing the FinCEN reports, or if lawyers should now include a FinCEN reporting provision on corporate documents, but in any event starting on January 1, 2024 all people involved and/or related to corporate entities in the United States that fulfill the requirements, as stated above, will be required to file the FinCEN report as part of a enhanced campaign by the U.S. Government to obtain additional information about shareholders and beneficial owners of U.S. companies for purposes of having more transparency and avoiding money laundering and illegal activities through the use of legal entities and the banking system in the United States. Starting on January 1, 2024, the FinCEN report can be filed at www.fincen.gov/boi For new entities created or registered on or after January 1, 2024, the report must be filed within 30 days of registration, and for entities created or registered before January 1, 2024, will have until January 1, 2025 to file the FinCEN report.Article by Andres Bazo, Foreign Legal Consultant at Rasco Klock Perez & Nieto, P.L.
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