Nine months ago, Congress gave the Department of Justice (DOJ) and the Department of Treasury (Treasury) substantial new power to subpoena foreign-located bank records in any investigation under federal criminal law. Now, federal prosecutors have begun discussing publicly how they plan to use this new authority in foreign corruption and bribery investigations and other criminal investigations.
As we explained at the time, Congress added this new enforcement authority as part of the Anti-Money Laundering Act of 2020 under the 2021 National Defense Authorization Act (NDAA). It permits DOJ and Treasury to subpoena foreign-located bank records if the foreign bank maintains a correspondent bank account in the United States, regardless whether the correspondent account itself was used as part of the alleged violation of US law. The authority may now be used not only to investigate potential financial crimes, but also to investigate any violation of federal criminal law, to pursue civil asset forfeiture proceedings, or to investigate violations of the Bank Secrecy Act or anti-money laundering laws and regulations.
Earlier this week, Lorinda Laryea, the Principal Assistant Chief of the DOJ Fraud Division's FCPA Unit, foreshadowed her office's future use of this broadened subpoena authority. Speaking at an annual summit on compliance, anti-corruption, and investigations, Ms. Laryea said: "The NDAA subpoena is a tool that we have and is one that we are going to consider, and one that we will use in the appropriate circumstances." Her statement seems to go further than the original take of former DC US Attorney Jessie Liu, whose controversial subpoena to three Chinese banks prompted Congress to pass the new subpoena provision in the first place. After the law was passed, Liu and two other former federal prosecutors remarked that "it remains unclear how frequently U.S. prosecutors will seek to use this expanded subpoena authority."
Of course, prosecutors still will have to consider the diplomatic consequences of using the new, expansive subpoena power to get evidence from foreign banks, especially in cases where foreign blocking statutes or bank secrecy laws are in effect. Laryea acknowledged the "diplomatic sensitivities" at play when US authorities seek records of foreign banks. Reflecting the sensitivities, line prosecutors are required to consult with DOJ's Office of International Affairs and the State Department before seeking such subpoenas.
We expect that federal prosecutors—especially those focused on foreign corruption, trade sanctions, terrorist financing, and even tax evasion—will increasingly seek to use this powerful and long-sought tool to access a greater swath of foreign bank records much more quickly than possible using the traditional MLAT process. But increased use of these new subpoenas seems likely to invite more challenges by foreign banks, whether on the grounds that the subpoenas violate a foreign secrecy or confidentiality law or on the grounds that they exceed the jurisdiction of US courts. Stay tuned!
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