Wendy Wysong and team discuss a recent U.S. court ruling, which reinforces the well-understood rule that non-U.S. banks with branches or correspondent accounts in the U.S. must comply with U.S. government subpoenas regardless of their own country’s laws. Under the USA PATRIOT Act, noncompliance risks access to the U.S. financial system.
with co-authors Ali Burney and Nick Turner
Background
On March 18, 2019, the U.S. District Court for the District of Columbia unsealed a memorandum opinion ordering three Chinese banks to comply with law enforcement subpoenas issued in part under the USA PATRIOT Act. Two months later, on May 15, 2019, the Court unsealed a separate memorandum opinion and order holding the Chinese banks in contempt and fining them $50,000 per day for failing to comply with a March 28, 2019 deadline for responding to the subpoenas. The Court’s decision is currently stayed, pending appeal to the D.C. Circuit Court of Appeals.
According to the Court’s March opinion, in December 2017, two of the Chinese banks (referred to as “Bank One” and “Bank Two”) received grand jury subpoenas, while the third (referred to as “Bank Three”) received an administrative subpoena. The subpoenas sought records relating to a Hong Kong-based company suspected of acting as a front company for North Korea…
