In re Grand Jury Investigation of Possible Violations of 18 U.S.C. § 1956 and 50 U.S.C. § 1705
In re Grand Jury Investigation of Possible Violations of 18 U.S.C. § 1956 and 50 U.S.C. § 1705
Opinion of the Court
In December 2017, the United States Attorney for the District of Columbia served two Chinese banks-Bank One and Bank Two-with a grand jury subpoena, and a third Chinese bank-Bank Three-with an administrative subpoena.
Consistent with the parties' agreed upon briefing schedule, on January 7, 2019, each bank filed an opposition, supported by voluminous attachments, to the government's motion. See Bank One's Opp'n to Gov't's Mot. Compel ("Bank One's Opp'n"), ECF No. 6 (No. 18-175); Bank Two's Opp'n to Gov't's Mot. Compel ("Bank Two's Opp'n"), ECF No. 3 (No. 18-176); Bank Three's Opp'n to Gov't's Mot. Compel ("Bank Three's Opp'n"), ECF No. 4 (No. 18-177). The government then filed a single omnibus reply, on February 4, 2019, with its own attachments. See Gov't's Omnibus Reply Supp. Mots. Compel Prod. ("Gov't's Reply"), ECF No. 14 (No. 18-175).
Following a March 5, 2019 hearing with the government and all three banks, the government and two of the banks-Bank One and Bank Two-were permitted to submit supplemental briefing on a personal jurisdiction issue specific to each bank. The government's supplemental briefs were filed on March 8, 2019, see Gov't's Suppl. Br. Personal Jurisdiction-Bank One ("Gov't's Suppl.-Bank One"), ECF No. 29 (No. 18-175); Gov't's Suppl. Br. Personal Jurisdiction-Bank Two ("Gov't's Suppl.-Bank Two"), ECF No. 25 (No. 18-176), and each bank's response was filed on March 12, 2019, see Bank One's Suppl. Br. Personal Jurisdiction ("Bank One's Suppl."), ECF No. 30 (No. 18-175); Bank Two's Suppl. Br. Personal Jurisdiction ("Bank Two's Suppl."), ECF No. 26 (No. 18-176).
Upon consideration of this weighty record, and for the following reasons, each of the government's three motions is granted.
I. BACKGROUND
The three subpoenas in this matter pertain to an investigation into [REDACTED]. See Gov't's Mot.-Bank One at 1
A. [REDACTED] Transactions for [REDACTED]
Between October 2012 and January 2015, [REDACTED] used [REDACTED] for United States dollar transactions totaling $ 105,339,483.59. Gov't's Mot.-Bank One at 2; accord Gov't's Mot.-Bank Three at 2. Of that money, $ 45,779,669.50 traveled through a United States correspondent bank account of Bank One, which is a Chinese bank with [REDACTED] United States branches. Gov't's Mot.-Bank One at 2-3; Bank One's Opp'n at 1.
Many of these transactions were made after the Treasury Department's Office of Foreign Assets Control ("OFAC"), on [REDACTED], "designated" the [REDACTED] pursuant to Executive Order 13382. See Actions Taken Pursuant to Executive Order 13382, [REDACTED]. Executive Order 13382 authorizes the Secretary of State, the Secretary of Treasury, or "other relevant agencies," to designate, after consulting with their counterpart and the Attorney General, any individual or entity as having engaged "in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery," as having "provided, or attempted to provide, financial, material, technological or other support for" any such transaction, or as being "owned or controlled by, or acting or purporting to act for or on behalf of" any already-designated individual or entity. See Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters, Exec. Order 13382,
Based on [REDACTED]'s transactions through the United States financial market, the government is investigating [REDACTED] for three crimes: (1) money laundering, in violation of
B. The Investigatory Subpoenas
In aid of that investigation, on December 26, 2017 the United States Attorney for the District of Columbia sent Bank Three a subpoena under
The next day, Bank One's and Bank Two's local branch each received identical grand jury subpoenas. See Gov't's Mot.-Bank One at 5; see also Bank One's Opp'n, Ex. 1, Grand Jury Subpoena, ECF No. 6-1 (No. 18-175). Those subpoenas commanded that a representative of each bank appear to testify before the grand jury, and bring before the grand jury records, including "(a) signature cards; (b) documentation of account opening; (c) account ledger cards; (d) account statements; (e) due diligence (including invoices); and (f) records (copied front and back) of all items deposited, withdrawn, or transferred," dated between January 1, 2012 and December 26, 2017, related to any account belonging to [REDACTED] or related to a specific account believed to be associated with [REDACTED]. See Grand Jury Subpoena.
C. Negotiating Alternatives to the Subpoenas
In January 2018, representatives from Bank Three met with the China Banking Regulatory Commission ("the Commission") and the People's Bank of China ("People's Bank"), which together regulate Chinese banking, about the subpoena and were told that the only way under Chinese law that the bank could comply was *48through the process established under the Agreement Between the Government of the United States of America and the Government of the People's Republic of China on Mutual Legal Assistance in Criminal Matters ("MLAA"), June 19, 2000. See Bank Three GM Decl. ¶¶ 18-20. In March 2018, Bank Three representatives again met with Chinese officials, including officials from the Commission, the People's Bank, and the MOJ, the latter of which is designated under the MLAA as the Chinese authority responsible for MLAA communications. See Bank Three GM Decl. ¶ 20; MLAA Art. 2. The Chinese authorities repeated that Bank Three should ask the United States government to request the subpoenaed records through the MLAA process and informed Bank Three that the MOJ would respond quickly to an MLAA request. Bank Three GM Decl. ¶¶ 20a, 20b. The MOJ's advice was memorialized in a March 22, 2018 letter sent to Bank Three, which relayed that the MOJ would timely review and handle an MLAA request. Bank Three GM Decl., Ex. 2, Mar. 22, 2018 MOJ Ltr., ECF No. 4-2 (No. 18-177). The same letter explained that if Bank Three "provide[s] relevant client information to the U.S. DOJ directly, the banking regulatory authorities will impose administrative penalties and fines on you, and you may bear civil or criminal liabilities depending on your situation."
Still in March 2018, United States counsel for Bank Three shared the MOJ's letter with, and sent a letter on behalf of Bank Three, to the United States government explaining that Bank Three had been advised that under Chinese law, the MLAA is the exclusive vehicle for the bank to produce the requested records. Bank Three GM Decl. ¶ 23; Bank Three's Opp'n, Decl. of Bank Three's U.S. Counsel ("Bank Three U.S. Counsel Decl."), Ex. 3, Mar. 23, 2018 U.S. Counsel Ltr., ECF No. 4-1 (No. 18-177). Bank Three's counsel assured the United States government that the MOJ "would quickly respond to such a [MLAA] request" and that the bank was "ready and willing to provide [the records] to MOJ," Mar. 23, 2018 U.S. Counsel Ltr. at 1, having taken steps to preserve the requested records,
Bank One claims to have expressed a willingness to facilitate an MLAA request around the same time. Bank One's Opp'n at 3-4. Additionally, Bank Two "has given its assurances that it will produce the requested documents within days of a request through the MLAA." Bank Two's Opp'n at 16.
Following these communications, a delegation from the Department of Justice visited China-once in April 2018 and again in August 2018-to discuss "China's repeated failure to respond to MLAA requests-which necessitated the United States to proceed through Bank of Nova Scotia subpoenas and other authorities under U.S. law." Gov't's Reply, Ex. 3, Decl. of Associate Director of the Office of International Affairs of Department of Justice's Criminal Division ("DOJ Decl.") ¶ 17, ECF No. 14-3 (No. 18-175). These discussions did not result in the production of the requested documents.
D. The Government's Motions to Compel
As already outlined, in November 2018, the United States government filed a motion to compel compliance with each of the three subpoenas. See generally Gov't's Mot.-Bank One; Gov't's Mot.-Bank Two; Gov't's Mot.-Bank Three. Briefing continued through the end of February 2019, at which time the banks all filed a sur-reply. See generally Bank One's Sur-Reply; Bank Two's Sur-Reply; Bank Three's Sur-Reply.
While briefing was underway, the MOJ sent two letters to the Court. In the first, *49the MOJ committed to "timely review and handle the requests for assistance sought by DOJ in accordance with the [MLAA] and applicable domestic law. For the request in line with the [MLAA], China will provide the assistance to the United States accordingly." See, Jan. 6, 2019 MOJ Ltr. at 4. In the second, the MOJ restated that "if the DOJ makes a MLA[A] request in the present case, the MOJ will promptly review and process it. To be more specific, if such a US request complies with the applicable provisions of the [Law of the People's Republic of China on International Legal Assistance in Criminal Matters] and the MLAA, the MOJ will promptly transfer the request to Competent Authorities of China for further review and execution." Feb. 26, 2019 MOJ Ltr. at 3.
On March 5, 2019, the Court held a hearing with all three banks. Following the hearing, the government, Bank One, and Bank Two submitted supplemental briefing about whether those two banks, in the process of seeking authorization from the Board of Governors of the Federal Reserve System ("Federal Reserve") to open United States branches, had filed a consent to personal jurisdiction that covered this matter. See generally Gov't's Suppl.-Bank One; Gov't's Suppl.-Bank Two; Bank One's Suppl.; Bank Two's Suppl.
With the briefing and hearing now complete, the motions are ripe for resolution.
II. LEGAL STANDARD
If compliance with a grand jury subpoena "would be unreasonable or oppressive," a court may quash or modify the subpoena. FED. R. CRIM. P. 17(c)(2). A subpoena might be unreasonable or oppressive if compliance would violate foreign law. In re Grand Jury Subpoena ,
As for the administrative subpoena, the court's role "is a strictly limited one." Resolution Tr. Corp. v. Thornton ,
III. DISCUSSION
The government's motions to compel compliance present two principle issues: First, whether the subpoenas are enforceable, which, in turn, depends on whether the banks are subject to this Court's jurisdiction and whether the subpoena issued to Bank Three exceeds the government's authority under
A. Personal Jurisdiction
To direct an entity, or its representative, to come before a grand jury, the district court must have personal jurisdiction over the entity. In re Sealed Case ("Sealed Case II "),
1. Consent to Jurisdiction by Bank One and Bank Two
For two of the banks-Bank One and Bank Two-personal jurisdiction is straightforward: each has consented to personal jurisdiction. Those two banks, while applying to the Federal Reserve to open a branch in the United States, "consent[ed] to the jurisdiction of the federal courts of the United States and of all United States governmental agencies, departments and divisions for purposes of any and all claims made by, proceedings initiated by, or obligations to, the United States, the Board, and any other United States governmental agency, department or division, in any matter arising under U.S. Banking Law." Gov't's Suppl.-Bank One, Ex. A., Consent to Jurisdiction-Bank One at 1, ECF No. 29-1 (No. 18-175); accord Gov't's Suppl.-Bank Two, Ex. A., Consent to Jurisdiction-Bank Two, ECF No. 25-1 (No. 18-176).
Bank One argues that consent to the "jurisdiction of the federal courts of the United States" does not mean what it says, but rather means "consent to the jurisdiction of some federal court (e.g., a federal court having a connection to the matter at issue) though not necessarily any and every federal court." Bank One's Suppl. at 4 (emphasis in original).
Bank Two, for its part, tries to avoid the consent by arguing that the Bank Secrecy Act cannot apply here because [REDACTED] is not a financial institution under the Bank Secrecy Act, the Bank Secrecy Act does not apply extraterritorially to an entity, like [REDACTED], without United States operations, and the consent should be read as limited only to instances in which the bank itself is accused of wrongdoing. Bank Two's Suppl. at 6-7. Bank Two's arguments elide too much context. First, [REDACTED] is not the only subject of the investigation. [REDACTED] is another. Second, the government's investigation is still before the grand jury. At this stage, the government need not prove violations of the Bank Secrecy Act, or who may have violated the statute, for the enforcement action to arise under United States banking law. "[T]o establish jurisdiction for purposes of enforcing a grand jury subpoena, the [government] need not prove what would be necessary to confer jurisdiction over the companies for purposes of trial.... [S]o stringent a requirement 'might well invert the grand jury's function, requiring that body to furnish answers to its questions before it could ask them." Sealed Case II ,
In short, both Bank One and Bank Two have expressly consented to the exercise of personal jurisdiction in this proceeding.
2. Each Bank Has Sufficient Minimum Contacts with the Relevant Forum for the Exercise of Personal Jurisdiction
If, however, the consent forms are ineffectual, Bank One and Bank Two are on similar footing as Bank Three, which has never has submitted any consent to the Federal Reserve. In that case, personal jurisdiction over the banks may take one of two forms: "general or all-purpose jurisdiction" or "specific or case-linked *52jurisdiction." Goodyear ,
Each of the three banks contests that the necessary contacts with District of Columbia are present and therefore each contends that being subjected to jurisdiction in the District of Columbia is unfair. The government considers the banks' focus on the District of Columbia as misplaced since the relevant forum for consideration of personal jurisdiction is the United States as a whole. Gov't's Mot.-Bank One at 10; Gov't's Mot.-Bank Three at 10. The Court is persuaded that the government is correct and that the banks' contacts with the United States are the measure of whether personal jurisdiction may be exercised here.
a) Defining the Relevant Forum
The first step in determining whether a party has adequate contacts for personal jurisdiction is identifying the forum with which the contacts must be assessed. For a case subject to the Fourteenth Amendment's Due Process Clause, personal jurisdiction depends on the party's "relationship to the forum State." Bristol-Myers Squibb ,
Which constitutional amendment governs depends on how service may be accomplished. See Livnat ,
The Fifth Amendment controls here, the government contends, because the Court's power to enforce the three subpoenas derives from federal authority permitting nationwide service of process. See Gov't's Mot.-Bank One at 10 ("When considering specific personal jurisdiction under a federal statute that allows for nationwide service, such as a grand jury subpoena, the forum for which a court examines the party's contacts is the entire United States, rather than a specific district."); Gov't's Mot.-Bank Three at 10 ("When considering specific personal jurisdiction under a federal statute that allows for nationwide service, such as an administrative subpoena issued pursuant to
i) Grand Jury Subpoenas
Bank One's and Bank Two's initial opposition briefs each challenged being subject to this Court's exercise of personal jurisdiction, but, at best, each ignored that the United States might be the relevant forum for minimum contacts.
Only in their sur-replies did Bank One and Bank Two offer a response to the government's contention that the jurisdictional forum is the United States. Even indulging those belated arguments, they fail on the merits. In its sur-reply, Bank One notes that the government is investigating possible violations of
Relegated to a single sentence of a footnote, see Bank One's Sur-Reply at 4 n.2, Bank One conveys an understanding that jurisdiction here does not turn on the specific crimes the grand jury is investigating, but rather is a function of Federal Rule of Criminal Procedure 17, which governs federal grand jury subpoenas, see Dep't of Justice Manual § 9-11.140 ("Subpoenas in Federal proceedings, including grand jury proceedings, are governed by Rule 17 of the Federal Rule of Criminal Procedure."). Under that procedural rule, "[a] subpoena requiring a witness to attend a hearing or trial may be served at any place within the United States." FED. R. CRIM. P. 17(e). Plainly, a grand jury subpoena may be served nationwide.
Still, Bank One maintains that Federal Rule of Criminal Procedure 17(e) does not apply here because that rule "allow[s] nationwide service only for subpoenas to compel attendance at a hearing or trial." Bank One's Sur-Reply at 4 n.2. Bank One's argument is bewildering because the subpoena Bank One received was a "Subpoena to Testify before a Grand Jury," which commanded a witness "to appear in this United States district court at the time, date, and place shown below." See Grand Jury Subpoena. While the subpoena also required the witness to bring documents,
At bottom, Federal Rule of Criminal Procedure 17(e) allows for the grand jury subpoena that Bank One and Bank Two each received to be served nationwide. Therefore, personal jurisdiction depends on each banks' contacts with the United States.
ii) Administrative Subpoena
Like Bank One and Bank Two, Bank Three's initial opposition brief gave short-shrift to the possibility that the relevant jurisdictional forum is the United States. While Bank Three spent several pages discounting its contact with the District of Columbia, see Bank Three's Opp'n at 11-15, the bank spent just a single footnote attacking that personal jurisdiction to enforce an administrative subpoena that can be served nationwide depends on national contacts,
In light of this precedent, Bank Three's sur-reply changes course, arguing that
Even if not waived, the argument Bank Three advances is unpersuasive. A subpoena under
Comparing
Elsewhere in the statute, the Attorney General is authorized to initiate compliance proceedings against a financial institution's representative if the financial institution refuses the Secretary of Treasury's summons issued under
Thus, Congress provided for nationwide service of a subpoena issued to a foreign bank that maintains a correspondent account in the United States. Personal jurisdiction over Bank Three, like Bank One and Bank Two, depends on the bank's contacts with the United States.
b) Minimum Contacts
Moving to each bank's United States contacts, personal jurisdiction exists only if each bank has " 'purposefully availed itself of the privilege of conducting activities within the forum State' or [ ] purposefully directed its conduct into the forum States." Bristol-Myers Squibb ,
The government hangs personal jurisdiction here on the banks having "availed themselves of the privileges of conducting transactions in U.S. dollars via correspondent accounts in the United States." Gov't's Mot.-Bank One at 12; accord Gov't's Mot.-Bank Three at 12-13. In particular, between October 2012 and January 2015, [REDACTED] conducted: 323 transactions through Bank One's United States correspondent account, worth $ 45,779,669.50, see Gov't's Mot.-Bank One at 2-3; see also FBI Decl. ¶ 13; 15 transactions through Bank Two's United States correspondent account, worth $ 1,627,909.34, see Gov't's Mot.-Bank One at 2-3; see also FBI Decl. ¶ 13; and 388 transactions through Bank Three's correspondent account, worth $ 57,931,904.75, see Gov't's Mot.-Bank Three at 2-3; see also FBI Decl. ¶ 13.
Previously, the D.C. Circuit has described a bank that does "considerable business in the United States" as "plainly [having] the 'minimum contacts' with this country to establish jurisdiction." Sealed Case II ,
Bank Three cites one case from this district ruling that "[t]he Court ... is at a loss as to how the existence of [correspondent] bank accounts in New York can possibly establish the banks' presence in the District of Columbia. " Bank Three's Opp'n at 14 (quoting Day v. Cornér Bank (Overseas) Ltd. ,
Of course, the banks' United States banking activity must relate to the matter over which the Court will exercise jurisdiction. See Bristol-Myers Squibb,
Accordingly, the subpoenas are directly related to the minimum contacts that permit the exercise of jurisdiction.
c) Fair Play and Substantial Justice
Finally, the exercise of personal jurisdiction over any of the banks must not "offend traditional notions of fair play and substantial justice." Goodyear , 564 U.S. at 923,
Generally, the banks advance that the exercise of jurisdiction here would be unfair because the potential upshot of jurisdiction is a burdensome order compelling the production of records that are housed in China, see Bank One's Opp'n at 7, and cannot be disclosed without violating Chinese law, see id. at 8; Bank Two's Opp'n at 38; Bank Three's Opp'n at 16. Imposing such a burden is unnecessary, in the banks' view, given that the MLAA is an efficient alternative, see Bank One's Opp'n at 9-10; Bank Two's Opp'n at 38; Bank Three's Opp'n at 16-17. Additionally, forcing the banks to divulge client information undermines China's interests in a secure banking system, see Bank One's Opp'n at 8, and might lead to reciprocal consequences, Bank Three's Opp'n at 17.
None of the banks' own interests, or those of China, match the United States' much stronger interest in the exercise of jurisdiction. Consequently, subjecting the banks to this Court's jurisdiction is, simply put, not unfair. Indeed, two of the banks consented to personal jurisdiction for matters arising under United States banking law. See Consent to Jurisdiction-Bank One; Consent to Jurisdiction-Bank Two. Beyond that, each bank has funneled over a million dollars through the United States on behalf of [REDACTED]. As the Second Circuit has said about such correspondent banking activity, "[i]t should hardly be unforeseeable to a bank *59that selects and makes use of a particular forum's banking system that it might be subject to the burden of a lawsuit in that forum for wrongs related to, and arising from, that use." Licci ,
Nor would enforcement impose onerous logistical burdens on any of the banks. The government has offered Bank One and Bank Two the option of simply mailing the requested records. See Grand Jury Subpoena Ltr. ("Although you are not required to do so, if it is more convenient for you, you may send the requested records to the undersigned United States Attorney in lieu of personally appearing before the Grand Jury on the date indicated."). Similarly, the administrative subpoena calls only for Bank Three to produce records. Admin. Subpoena ("Compliance can be made by mailing the requested documents via courier...."). None of the banks contends that locating those records will be difficult. To the contrary, Bank Two has given assurances that the requested documents can be collected in days, see Bank Two's Opp'n at 16; Bank Two's Sur-Reply at 3, and Bank Three "took steps to collect and preserve documents" shortly after receiving the subpoena, see Bank Three GM Decl. ¶ 14; accord Mar. 23, 2018 U.S. Counsel Ltr. at 1-2. Bank One estimated that the documents could be collected within 30 days. Mar. 5, 2019 Tr. at 47:3-7, ECF No. 28 (No. 18-175). With the documents already, or easily, collected, now the banks need only put them in the mail, hardly a burden. To the extent that further legal issues will arise from enforcement of the subpoenas, the well-resourced banks are all fully able to ensure adequate representation of their interests.
Additionally, for reasons discussed more thoroughly in Section III.C.2, infra , the remainder of the banks' specific arguments are unavailing: the risk that any of the banks will be penalized in China for complying with the subpoenas is overblown; the United States, which seeks these records as part of an investigation into North Korea's nuclear weapons program, does not have an alternative route to obtain them since the MLAA, at least for banking records, is unproductive; and while China does have a legitimate interest in a sound financial system, Chinese law permits the disclosure of banking records in analogous circumstances and therefore appreciates that banking systems do not crumble because the government can obtain some records for law enforcement purposes.
* * * * *
All told, each bank has purposefully availed itself of the United States financial market through correspondent banking activity, including transactions on behalf of [REDACTED]. The subpoenas are for records related to that activity. Nothing about the exercise of jurisdiction is unjust under those circumstances.
B. Statutory Authority for Administrative Subpoena
Separate from personal jurisdiction, Bank Three argues that the
Under the USA Patriot Act, Congress authorized the Attorney General and Secretary of Treasury to subpoena records from a foreign bank that maintains a correspondent account in the United States, but only "records related to such correspondent account, including records maintained outside the United States relating to the deposit of funds into the foreign bank."
Two flaws erode the strength of Bank Three's contention. First, the bank's insistence that every record encompassed by the subpoena must itself "relate to" a correspondent bank account in the United States entirely ignores the final clause of
Second, Bank Three's argument that the subpoena overreaches because it seeks signature cards, account ledgers cards, account statements, and due diligence records, among other records, none which relate to a correspondent account, glosses over "a key feature of the investigation-[REDACTED] solely existed as a front company for [REDACTED]." Gov't's Reply at 29 (citing FBI Decl. ¶¶ 8-10); accord
Only one other court, the District of Oregon, has reviewed whether a subpoena issued under
While Bank Three prefers that this Court outright deny the motion to compel based on the subpoenas purported overbreadth, see Mar. 5, 2019 Tr. at 89:2-22, curtailing the subpoena, a la Sedaghaty , is the fall back suggestion,
Accordingly, the subpoena issued to Bank Three is within the authority conferred under
C. Comity
Authority to enforce the subpoenas is just step one. Step two is whether the court should exercise that authority to enforce the subpoenas. When an enforcement order would create a "true conflict" between domestic and foreign law, the Court should consider, as a matter of international comity, whether to abstain from exercising its authority. See Hartford Fire Ins. Co. v. California ,
Here, determining whether compelling the banks to comply with the subpoenas would create a "true conflict" is the easy part. The government concedes that complying with the respective subpoenas exposes each bank to legal penalties in China. Gov't's Reply at 14 (agreeing that, "at least to some degree," Chinese law prohibits the banks from complying with the subpoenas); id. at 20 (agreeing that "compliance with the extant subpoenas 'might violate certain Chinese regulations and lead to administrative sanctions' " (quoting Gov't's Expert Decl. ¶ 10a)). Resolving the comity concerns is a murkier matter, however. On that issue, the parties disagree as to whether circuit precedent dictates the outcome. Assuming the answer is no, the parties also disagree on the proper approach to, and resolution of, comity concerns in this case. These issues are addressed in turn.
1. Circuit precedent
The banks contend that In re Sealed Case ("Sealed Case I "),
Sealed Case I 's caveat comports with the Supreme Court's treatment of international comity as a principle that depends on "prior scrutiny in each case of the particular facts, sovereign interests, and likelihood that resort to [alternative] procedures will prove effective." Societe Nationale ,
In this case, the government discredits Sealed Case I , which was decided two months after Societe Nationale , because the Circuit's opinion did not explicitly reference the factors that Societe Nationale deemed "relevant to any comity analysis." Gov't's Mot.-Bank One at 27; accord Gov't's Mot.-Bank Three at 28. That Sealed Case I did not explicitly cite those factors does not mean that the D.C. Circuit was unaware of, or neglected, that recent Supreme Court decision and Sealed Case I is still good law in this circuit. Still, Societe Nationale matters as to whether Sealed Case I dictates a result here: should any of the factors deemed relevant by the Supreme Court differ between Sealed Case I and this case, then the particular constellation of facts here must be freshly considered.
Indeed, two critical circumstances, drawn from Societe Nationale 's factors, distinguish this matter from Sealed Case I . First, the investigation in Sealed Case I pertained to "an alleged scheme by a number of American citizens and business entities to launder money."
Second, in this investigation the government insists that without compelling compliance, the requested information is out of reach. Gov't's Mot.-Bank One at 26; accord Gov't's Mot.-Bank Three at 27. The banks vigorously dispute the accuracy of the government's assertion, with each bank highlighting the commitments from the MOJ that any MLAA request will be timely reviewed and handled. Bank One's Opp'n at 19; Bank One's Sur-Reply at 10-11; Bank Two's Opp'n at 25-26; Bank Two's Sur-Reply at 10; Bank Three's Sur-Reply at 17. While the banks have made commitments to turn over the requested records to the MOJ, and the MOJ has made commitments to timely review the records, whether those records ever arrive in the United States is less certain. Close scrutiny reveals that the MOJ's commitments in this case are not so firm.
The first MOJ letter about this case, sent to Bank Three in March 2018, committed to "review[ing] and handl[ing] [an MLAA] request timely in accordance with the [MLAA] and relevant PRC laws." Mar. 22, 2018 MOJ Ltr. The MOJ's next two letters, each sent in 2019 and addressed directly to this Court, proclaim that "[t]he MOJ would timely review and handle the requests for assistance sought by DOJ in accordance with the [MLAA] and applicable domestic laws. For the request in line with the [MLAA], China will provide assistance to the United States accordingly," Jan. 6, 2019 MOJ Ltr. at 4, and that if "DOJ makes a MLA[A] request in the present case, the MOJ will promptly review and process it. To be more specific, if such a US request complies with the applicable provisions of the [Law of PRC on International Legal Assistance in Criminal Matters] and the MLAA, the MOJ will promptly transfer the request to Competent *65Authorities of China for further review and execution," Feb. 26, 2019 MOJ Ltr. at 3.
The caveats in the MOJ letters-that the requests must comply with the MLAA and Chinese law-do not refer to simple ministerial matters. By their own admission, Chinese officials have not always been satisfied with MLAA requests from the United States government. Id. at 6-7. Additionally, the United States government has been disappointed before in a case in which the MOJ "indicated that they would act on the MLAA request and cooperate in the investigation," only to leave the MLAA requests unanswered. DOJ Decl. ¶ 13c. Even Bank Two acknowledges that the MOJ's representations about compliance are no guarantee. Bank Two's Opp'n at 19 (suggesting that the government should have made an MLAA request so that, if nothing else, the Court "would know by now that such a request was futile"). As discussed at more depth in the comity analysis that follows, see Section III.C.2.d., infra , the MOJ's purported willingness to comply with an MLAA request in this case might be concrete enough to weigh against enforcing the subpoena, but the MOJ's caveats, as well as the United States' past MLAA experience, mean that unlike Sealed Case I, nothing guarantees that without compelling compliance the "grand jury is not left empty-handed." Sealed Case I ,
For those two reasons, Sealed Case I alone does not direct the outcome here.
2. Balancing the Comity Factors
Without precedent squarely on point, the Court's comity analysis must scrutinize "the particular facts, sovereign interests, and likelihood that resort to [alternative] procedures will prove effective." Societe Nationale ,
Although never having articulated neatly the comity standard, the D.C. Circuit has endorsed the Second Circuit's two additional factors. Returning to Sealed Case I , the D.C. Circuit distinguished two cases in which the Eleventh Circuit affirmed enforcement of subpoenas against foreign entities for records held abroad as instances in which the contemnor had not acted in good faith. Sealed Case I ,
A decision whether to enter a contempt order in cases like this one raises grave difficulties for courts. We have little doubt, for example, that our government and our people would be affronted if a foreign court tried to compel someone to violate our laws within our borders. The legal expression of this widespread sentiment is found in basic principles of international comity. But unless we are willing simply to enter contempt orders in all such cases, no matter how extreme, in utter disregard of comity principles, we are obliged to undertake the unseemly task of picking and choosing when to order parties to violate foreign laws. It is conceivable that we might even be forced to base our determination in part on a subjective evaluation of the content of those laws; an American court might well find it wholly inappropriate to defer to a foreign sovereign where the laws in question promote, for example, torture or slavery or terrorism.
*67Thus, whether, as a matter of comity, enforcing the subpoenas here would be unreasonable depends on application of the seven factors that the Second Circuit has clearly articulated and the D.C. Circuit has, at least implicitly, endorsed.
a) Importance to the Investigation of the Requested Information
To begin, the government avows the "[t]he subpoenaed documents are the foundation of the United States' investigation" as without the records "the government lacks visibility as to the identities of the financial facilitators behind this scheme, the source of the illicit funds into these accounts, where remaining funds may have been transferred, and the banks' roles in facilitating such activities." Gov't's Mot.-Bank One at 21; accord Gov't's Mot.-Bank Three at 21-22. More specifically, the records are necessary, for example, because North Korea, using "third-country intermediaries," relies on "bulk cash smuggling and other illicit activity that supports, among other things, its proliferation of [weapons of mass destruction] technology and missile systems," FBI Decl. ¶¶ 40-41. Bank statements and cash deposits will allow investigators to trace these inflows and outflows of cash, information the government cannot otherwise access. Id. ¶¶ 36, 48. Additionally, records of intrabank transfers into or out of [REDACTED]'s account will disclose co-conspirators, which, again, is information the government cannot otherwise access. Id. ¶¶ 49-51. Bank statements and records are needed also "to determine if any U.S. Dollar [REDACTED] accounts were used to convert foreign currency to/from U.S. dollar," id. ¶ 53, and the extent to which Chinese bank officials knowingly facilitated payments for North Korea's benefit, id. ¶ 59.
The banks do not dispute that the requested records would contain the information that the government describes or that such information would further the investigation. See Bank One's Opp'n at 22 (admitting that Bank One "cannot speak directly to what documents the Government may think it does or does not need as part of its grand jury investigation"); Bank Two's Opp'n at 18 (assuming "that the documents sought by the U.S. are important to the grand jury"). The Court, thus, agrees that the records are essential to the investigation underway.
Nevertheless, "the Government waited nearly an entire year after the issuance of the Subpoena to file its Motion." Bank One's Opp'n at 22; accord Bank Two's Opp'n at 18. Moreover, the government "declined to pursue an MLAA request" as an alternative means of seeking the documents. Bank Two's Opp'n at 18. Although the delay and decision to forgo a possible means for obtaining the records suggest that the current investigation is not urgent, those facts are not as damning as appears at first blush. In between issuing the subpoenas and filing the motions to compel, the Department of Justice twice sent a delegation to China to discuss China's *68responsiveness to MLAA requests. DOJ Decl. ¶ 17. Moreover, the Department of Justice was engaged in intra- and inter-agency deliberations during the interim about the most prudent way to secure the records. Id. ¶ 18; FBI Decl. ¶ 80. Treading lightly on a matter implicating delicate diplomatic considerations should not be held against the government.
On this record, the first factor favors the government. If the government's lack of alacrity might otherwise have tempered how heavily this factor tilts to the government, other considerations indicate that caution should not be so ruinous.
b) Specificity of the Request for Information
As to the second factor, the subpoenas are tailored to specific financial records, for a defined date range, at banks [REDACTED] is known to have used to launder funds. See Grand Jury Subpoena; Admin. Subpoena; see also FBI Decl. ¶ 9. Bank Two concedes that "[t]he request is reasonably specific." Bank Two's Opp'n at 18. Bank One agrees in part, appreciating that the subpoenas seek records "related only to one entity and one account for a specific time period," but argues that the subpoena is too broad because "it requests production of all records" related to [REDACTED], which sweeps in "documents unrelated to the alleged illicit U.S. dollar payments made by [REDACTED] for the benefit of the North Korean government." Bank One's Opp'n at 22-23.
As the government points out, "[REDACTED] solely existed as a front company for [REDACTED]." Gov't's Reply at 29 (citing FBI Decl. ¶¶ 8-10). Thus, contrary to Bank One's position, all [REDACTED] records relate to the conduct under investigation. Given the nature of that investigation, the subpoenas hardly could be narrower. Other courts have found subpoenas that seek information limited to accounts known to be connected to the matter under investigation satisfactorily specific. See Gucci Am., Inc. v. Weixing Li ("Gucci I "), No. 10 CIV 4974 RJS,
This factor supports enforcement of the subpoenas.
c) Origin of the Information
The documents at issue here originated in China. The government concedes that this factor counsels for respecting principles of international comity. Gov't's Mot.-Bank One at 21; Gov't's Mot.-Bank Three at 22. No further discussion is needed.
d) Alternative Means of Obtaining the Information
As to the fourth factor, the parties' disagreement is quite pronounced.
*69The MLAA between the United States and China commits the countries to providing assistance "in proceedings related to criminal matters," including "providing originals, certified copies or photocopies of documents, records or articles of evidence." MLAA Arts. 1, 2. While acknowledging that the MLAA "remains an effective law-enforcement tool in some investigations," the government adds that "China has not provided-via the MLAA channel-records similar to those subpoenaed by the grand jury in this investigation in at least 10 years." Gov't's Mot.-Bank One at 21-22; accord Gov't's Mot.-Bank Three at 22. Conversely, the banks say that China's responsiveness to MLAA requests has not been so poor and, in any event, both the banks and the MOJ have committed to responding to an MLAA request in this case. Bank One's Opp'n at 23-26; Bank One's Sur-Reply at 19-20; Bank Two's Opp'n at 15-16, 19; Bank Two's Sur-Reply at 5-8; Bank Three's Opp'n at 29-33; Bank Three's Sur-Reply at 15-16.
As a threshold matter, enforcing the subpoenas does not require that the government resort first to the MLAA's evidence sharing mechanisms. Societe Nationale ,
Historical precedent offers good reason for the United States to suspect that the MLAA, for records like those sought in this case, is not a real alternative. The Associate Director for the Department of Justice's Office of International Affairs of the Criminal division, which is the United States office responsible for making and receiving MLAA requests, explained that the MLAA "has been helpful in some limited circumstances," but not when it comes to bank records. DOJ Decl. ¶¶ 1, 6, 8. Over the last decade, the United States has made approximately 50 MLAA requests to China for bank records, only 15 of which have produced any response. Id. ¶ 9. Of those 15, most have been incomplete, untimely, or failed to include certification needed for the records' admissibility in a United States court. Id. At times, China's response was only a summary of the requested records. Id. ¶ 11. Currently, the United States has 40 MLAA requests pending, including the United States' ten most recent MLAA requests, 22 of which are for bank records. Id. ¶¶ 10, 13, 13a.
The MOJ has only a slightly different take on the history. By that agency's telling, China, between 2015 and 2017, sent the United States evidence about financial accounts on eight occasions. Jan. 6, 2018 MOJ Ltr. at 3-4. In response to the DOJ declaration, the MOJ identifies one occasion in which China responded to a 2017 MLAA request and notes that in another case, when China took several years to respond to an MLAA request, the two countries had been communicating about the request in the interim. Feb. 26, 2019 MOJ Ltr. at 6-7.
Still, the banks insist that this case is different because the banks and the MOJ have committed to respond to an MLAA request. Indeed, Bank Two "has given its assurances that it will produce the requested documents within days of a request through the MLAA," Bank Two's Opp'n at 16; accord Bank Two's Sur-Reply at 3, and Bank Three "took steps to collect and preserve documents" days after receiving the subpoena, Bank Three GM Decl. ¶ 14. Bank One's commitments are less concrete, but that bank represents that it offered in Spring 2018 to cooperate with an MLAA request, Bank One's Opp'n at 10, 22, 25, and could have the records ready in 30 days, Mar. 5, 2019 Tr. at 47:3-7.
Since receiving the subpoenas, the banks have acted in good faith and the sincerity of their willingness to comply is not questioned. The banks' compliance, however, gets the government only part way to the records sought. The MOJ's compliance, as well as that of other Chinese authorities, also is necessary, and that cooperation is doubtful. Through three letters, the MOJ has expressed how it will handle an MLAA request in this case. The first, the MOJ's March 2018 letter to Bank Three, explained that the MOJ would "review and handle [an MLAA request] timely in accordance with the [MLAA] and relevant PRC laws." Mar. 22, 2018 MOJ Ltr. The second, a January 2019 letter addressed to the Court, said that the MOJ "would timely review and handle the requests for assistance sought by the DOJ in accordance with the [MLAA] and applicable domestic laws. For the request in line with the [MLAA], China will provide the assistance to the United States accordingly." Jan. 6, 2019 MOJ Ltr. at 4. The third, a follow up letter to the Court, explained that "if the DOJ makes a MLA[A] request in the present case, the MOJ will promptly review and process it. To be more specific, if such a US request complies with the applicable provisions of the [Law of the PRC on International Legal Assistance in Criminal Matters] and the MLAA, the MOJ will promptly transfer the request to Competent Authorities of China for further review and execution." Feb. 26, 2019 MOJ Ltr. at 3. The MOJ provided assurances about its own promptness but not about other Chinese government components' review process. Nor did the MOJ promise that the response would be usable to the United States government but preemptively invited the United States to "make a supplement[al] request or clearly express the requirements, and we will timely process and respond to that request."
These MOJ letters harm the banks' case more than help. First, the MOJ's third letter clarifies that the MOJ is not the last level of Chinese review. So even if the banks' and the MOJ's commitments are sound, other Chinese agencies will be involved. Those authorities have made zero commitments in this case. Second, the MOJ assures that even if initial production does not generate records usable in an American court, the MOJ will consider *71supplementary requests. That back and forth, which might never culminate in the release of usable records, could take years. See DOJ Decl. ¶¶ 9, 13a; Feb. 26, 2019 MOJ Ltr. at 7. Third, the MOJ's final letter introduces a separate Chinese law-the International Legal Assistance in Criminal Matters-that any MLAA request must satisfy. That law puts both the MOJ and "the National Supervisory Committee, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, the Ministry of State Security and other departments ... in charge of international criminal judicial assistance," and makes those government agencies "responsible for examining and handling ... criminal judicial assistance requests made by foreign countries." Bank Two's Opp'n, Decl. of Professor of Law and Vice Dean at Peaking University Law School ("Bank Two Expert Decl."), Ex. B-18, International Criminal Judicial Assistance Law at Art. 6, ECF No. 3-21 (No. 18-176). That law also imposes independent requirements upon any country making a request of China for criminal legal assistance related to the collection of evidence.
Moreover, the government has been down this road before. In August 2016, the Department of Justice prepared and sent an MLAA request for bank records related to Dandong Hongxiang Industrial Development Co., Ltd., another agent of North Korea. FBI Decl. ¶¶ 14-16, 71. During an August 12, 2016 meeting, "Chinese authorities nominally agreed to work jointly with the U.S. authorities and requested a working group meeting to further discuss cooperation with DOJ officials familiar with the [Dandong] investigation." Id. ¶ 72. Despite that assurance, Chinese officials did an about-face two weeks later, and advised that China would not cooperate. Id. ¶ 73; see also DOJ Decl. ¶ 13c. A new MLAA request was sent in April 2017, and the Department of Justice still has not received a response. FBI Decl. ¶ 74; DOJ Decl. ¶ 13c. The Department of Justice no longer needs to take overtures of China's willingness to assist the United States' with investigations into North Korea seriously.
Why not, Bank Two, asks, make the government try at least one last time to explore the MLAA route given that, "the MOJ's credibility with this Court and every other federal court would be at issue if it did not fulfill its commitment." Bank Two's Sur-Reply at 7. Despite the facial reasonableness of this suggestion, forcing such a request would be ill-conceived. The United States and China have different interests as to North Korea. FBI Decl. ¶¶ 80-81. Allowing China to gum up United States' investigations by dictating how the United States can pursue evidence, especially when the two countries' interests are not aligned, is antithetical to sound law enforcement. Id. ¶ 83. Furthermore, in some instances the United States needs access to records without Chinese authorities taking a first pass. Id. ¶ 84. Finally, banks with knowledge that their records might be subject to a federal subpoena, without the shield of the MLAA slow-down process, would have a greater incentive to take care that their customers were not violating United States criminal laws. Id. ¶ 85. These policy rationales instruct against forcing the government to pursue an MLAA.
For the foregoing reasons, the government does not have a viable alternative and China should not be allowed to hold United States' law enforcement priorities hostage under the pretense of anticipated MLAA compliance. This factor favors the *72government and enforcement of the subpoenas.
e) Interests of Sovereigns in Conflict
Marching on to the fifth factor, the United States' interest in this case pertains to national security: "how North Korea, a nuclear armed state that is a state sponsor of terrorism, financed its weapons of mass destruction program in spite of extant sanctions." Gov't's Mot.-Bank One at 24; accord Gov't's Mot.-Bank Three at 25. Consequently, non-enforcement would undermine a critical national interest.
The banks have different responses. Bank Three "does not dispute that the United States has a strong interest in combating money laundering and enforcing international sanctions," Bank Three's Opp'n at 23, but argues that compelling production may frustrate those interests by having a "chilling effect on future communications by Chinese bank," id. at 24 (quoting Wultz v. Bank of China Ltd. ,
Non-enforcement of the subpoenas would undermine the United States' interests a great deal. First, the argument that no interest of the United States would be undermined because the United States has an alternative means of obtaining the same records is misdirected. Beside being factually incorrect, that argument bleeds together the fourth and fifth factors. Whether the government has alternative ways of getting the documents is a stand-alone consideration and not a reason to discount whether non-enforcement would undermine the United States' interests. Indeed, if the availability of an alternative were given the dispositive significance that Bank One and Bank Two suggest, none of the remaining factors would have to be considered. The consequence would be a de facto rule of first resort to any international treaty despite the Supreme Court having rejected such a rule, at least when, as here, the relevant treaty does not contain exclusivity language. Societe Nationale ,
On the other side of the balance, the government characterizes China's national interest as "protecting the [purported] right to privacy incorporated into its bank secrecy laws." Gov't's Mot.-Bank One at 24-25 (quoting In re Grand Jury Proceedings ,
China's interest in the development of a sound banking system is legitimate, contrary to the government's assertions otherwise, Gov't's Reply at 18, and bank secrecy laws protect that interest. Nevertheless, China's interest would not be undermined by enforcement of the subpoenas. Under Chinese law, Chinese banks may disclose bank records to a "competent organ" if that organ has presented to the bank a notice required by Chinese regulation. Bank Two Expert Decl. ¶ 19. Competent organs include "judicial organs, administrative organs, military organs and public institutions exercising administrative functions." Id. ¶ 20. While allowing for limited disclosure to Chinese authorities does not mean that similar disclosure to United States authorities would be legal under Chinese law, these exceptions reflect that even Chinese authorities recognize that bank secrecy can co-exist with limited disclosure to government agencies. Therefore, insofar as the laws at issue here further China's interest in a stable banking system, disclosure to the United States in response to an investigatory subpoena is not a detriment to that interest. Other courts have drawn a similar inference from Chinese laws permitting disclosure of bank records to the Chinese government. See In re Grand Jury Proceedings , 532 F.2d at 408 ("Field seeks to prohibit a United States grand jury from obtaining information that would have been obtainable by officials there for their own investigations. Since the general rule appears to be that for domestic investigations such information would be obtainable, we find it difficult to understand how the bank's customers' rights of privacy would be significantly infringed simply because the investigating body is a foreign tribunal."); Tiffany (NJ) LLC v. Forbse , No. 11 CIV 4976 NRB,
In sum, the non-enforcement of the subpoenas would undermine the United States national security interests and not undermine any articulated Chinese interest. This factor heavily favors enforcement of the subpoenas. See Wultz II ,
f) Hardship on the Party Facing Conflicting Obligations
For the sixth factor, the parties' disagreement on the facts relevant to *74hardship is narrower than the parties might concede. Administrative fines, by the government's account, are possible if the banks comply with the subpoenas. See Gov't's Expert Decl. ¶¶ 25, 29, 30. Civil liability, however, according to the government, is off the table because the banking customer-[REDACTED]-is defunct.
According to the banks, responding to the subpoenas requires that the banks disregard a litany of Chinese laws which impose fines up to "RMB 500,000 Yuan"-which converts roughly to $ 74,000-for unauthorized inquiries into bank accounts and for the unlawful dissemination of banking information. See Bank One's Opp'n, Decl. of Attorney at [REDACTED] ("Bank One Expert Decl.") ¶¶ 50, 52, 75, ECF No. 6-2 (No 18-175); Bank Two Expert Decl. ¶¶ 17b, 24-25, 27; Bank Three U.S. Counsel Decl., Ex. 1, Jan. 7, 2019 Bank Three's Chinese Counsel's Ltr. ("Jan. 7, 2019 Bank Three Ltr.") at 6, 8-10, ECF No. 4-1 (No. 18-177).
Although the banks cite multiple laws which would support the imposition of administrative penalties, actual examples, or the lack thereof, of penalties having been imposed against a bank in comparable cases has swung other Courts' analysis of whether the imposition of penalties is likely. Compare Nike I ,
By the same token, the government can point to relevant precedent, which differentiates this case from ones in which the party seeking enforcement has been unable to present "any instances in which Chinese banks complied with a United States court order compelling production of documents without negative consequence." Qi Andrew ,
*76Gucci III ,
As with severe administrative penalties, the lack of historical precedent reduces the banks' concerns about criminal punishment to pure speculation. Bank Three has four examples of criminal cases being brought against bank employees, but in each case the bank employee stole and sold client information for profit. Jan. 7, 2019 Bank Three Ltr. at 8. Bank Two's examples have the same dissimilarity. Suppl. Bank Two Expert Decl. ¶¶ 16-19. Here too the Gucci trio of cases, which did not result in any criminal prosecution, is most probative.
Finally, the banks highlight the MOJ's letters as confirmation that penalties will follow from an order enforcing compliance with the subpoenas. See Bank One's Opp'n at 15; Bank Two's Opp'n at 15; Bank Three's Opp'n at 19-20. Of course, "[i]n the spirit of 'international comity,' a federal court should carefully consider a foreign state's views about the meaning of its own laws." Animal Sci. Prod., Inc. v. Hebei Welcome Pharm. Co. , --- U.S. ----,
Here, the MOJ's letters have some indicia of credibility. The MOJ's counsel was sought prior to the government having initiated proceedings to compel compliance with the subpoenas and the Chinese government has consistently resisted the United States' attempts to enforce subpoena compliance as contrary to Chinese law. See Gucci II ,
In sum, the banks have established a basis in Chinese law for the imposition of punishment should any of the banks be compelled to comply with the subpoenas. Yet, such penalties, severe or otherwise, would be unprecedented. While the MOJ has said that the three banks, if they comply, will face administrative penalties, the MOJ's letters do not suggest that the Chinese government is inclined to take the counter-intuitive step of imposing heavy penalties against banks in which the Chinese government has a substantial ownership interest. At most, this factor tips ever so slightly toward the banks.
g) Good faith
Finally, the government agrees that none of the banks has acted in bad faith. Gov't's Reply at 31. Thus, the final factor favors the banks.
* * * * *
That leaves only how to balance the factors. To recap, the records' Chinese origins, the slim chance of the banks suffering some hardship if forced to comply, and the banks' good faith through this process all militate against enforcement of the subpoenas. Conversely, the importance of the subpoenaed records, the specificity of the subpoenas, the lack of alternative channels for obtaining the records, and the risk of undermining a United States national security interest at the pinnacle of importance, all favor enforcement.
Per the government, "[t]he balance of national interests is arguably the most important comity factor." Gov't's Mot.-Bank One at 23 (citing Richmark Corp. ,
On balance, international comity is not a reason to refrain from compelling compliance with the subpoenas. The most important factor, the interests of the relevant countries, could not fall more firmly in favor of enforcement. National security is at stake on one side; on the other, no national interest is compromised. Additionally, the United States government has subpoenaed only records relevant to its national security investigation and has done so because no effective alternative method of accessing those critical records exists. The banks' potential hardship is speculative, and, in any event, any penalty is unlikely to be consequential. While the *78records originated in China, and the banks, commendably, have acted in good faith, the importance of those factors pale in comparison to the remainder of the calculus.
Application of the factors redound strongly in favor of compelling compliance.
IV. CONCLUSION
For the foregoing reasons, each of the government's three motions-to compel compliance with the grand jury subpoenas issued to Bank One and Bank Two and the administrative subpoena issued to Bank Three-is granted.
Bank One and Bank Two are ordered, pursuant to the grand jury subpoenas served by the government, to appear before the grand jury to provide testimony at the earliest date available to the grand jury, or, in the alternative, Bank One and Bank Two shall, if the parties agree, promptly complete production of the subpoenaed records, in lieu of appearing before the grand jury.
Bank Three is ordered to complete production of the subpoenaed records by March 28, 2019.
Additionally, the parties are ordered to submit, by April 17, 2019, a joint report advising the Court whether any portions of this Memorandum Opinion may be unsealed.
An appropriate Order accompanies this Memorandum Opinion.
Bank One is [REDACTED]; Bank Two is [REDACTED]; and Bank Three is [REDACTED].
The same reply is docketed at ECF No. 7 in Case No. 18-176 and ECF No. 10 in Case No. 18-177.
The government's motion to compel production from Bank One and the motion to compel production from Bank Two are identical. For ease, only one of those motions is cited in this Memorandum Opinion.
A correspondent account is "an account established to receive deposits from, make payments on behalf of a foreign financial institution or handle other financial transactions related to such institution." 31 U.S.C. § 5318A(e)(1)(B).
[REDACTED] also have been designated. See Notice of OFAC Sanctions Actions, [REDACTED] (designating [REDACTED] ); Notice of OFAC Sanctions Actions, [REDACTED] (designating [REDACTED] ); Notice of OFAC Sanctions, [REDACTED] (designating [REDACTED] ).
This provision was enacted through the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, Pub. L. 107-56, § 319,
The only difference between the relevant language in the two consents is that Bank One's consent refers to the "Board," while Bank Two's refers to the "Board of the Governors of the Federal Reserve System."
These consents were discovered at the Court's prodding. See Min. Order (Mar. 4, 2019). Although the government did not learn of the consents in time to discuss them in the motions to compel, the government has not waived the argument that the banks' consents apply here since the government had no reason to know of the banks' consents, which were in the custody of the banks themselves and the Federal Reserve.
Bank One also argues that the consents violate the "unconstitutional conditions doctrine," Bank One's Suppl. at 3-4, which prevents "the government from coercing people into giving [enumerated rights] up," or from "burdening the Constitution's enumerated rights by coercively withholding benefits from those who exercise them," Koontz v. St. Johns River Water Management Dist ,
In an egregious mischaracterization, Bank One's sur-reply suggests that its opposition to the government's argument that the United States is the appropriate forum was "implicit." Bank One's Sur-Reply at 3 n.1.
Bank Three also asserts that "the subpoena is overly broad because the documents it requests are not tailored to any reasonable timeframe." Bank Three's Opp'n at 36. Yet, the subpoena goes back only to 2012. [REDACTED]'s correspondent banking activity stretches back until at least October 2012, and [REDACTED] was designated in [REDACTED]. As the government explains, "[l]aw enforcement needs to review records prior to the initial and final months of known U.S.-dollar transfers to learn where and how [REDACTED] initially drew in and then ultimately sent out illicit proceeds from its [Bank Three] account." Gov't's Reply at 39 (citing FBI Decl. ¶¶ 76-77). This explanation for why the government is seeking records from 2012 "is not 'obviously wrong' " and thus "must be accepted." FTC v. Invention Submission Corp. ,
That the USA Patriot Act authorizes access to a large array of records is unsurprising. Even before the terrorist attacks of September 11, 2001, problems related to correspondent banking were on Congress's radar. A Senate report from February 2001 identified foreign jurisdictions that combined weak banking practices with access to the United States financial market through correspondent accounts as "attractive venues for money launderers seeking banks to launder illicit proceeds and move funds into bank accounts in other countries." Minority Staff of S. Subcomm. on Investigations , 107th Cong. , Rep. on Correspondent Banking: A Gateway for Money Laundering * 31 (2001). Sure enough, the Congressional findings for Title III of the USA Patriot Act, which enacted provisions such as the authority for the administrative subpoena in this case, included that "correspondent banking facilities are one of the banking mechanisms susceptible in some circumstances to manipulation by foreign banks to permit the laundering of funds by hiding the identity of real parties in interest to financial transactions," and that "United States anti-money laundering efforts are impeded by outmoded and inadequate statutory provisions that make investigations, prosecutions, and forfeitures more difficult, particularly in cases in which money laundering involves foreign persons, foreign banks, or foreign countries." See USA Patriot Act § 302(a)(6), (8), 115 Stat. at 296-97. Correspondingly, an announced purpose of Title III was "to provide a clear national mandate for subjecting to special scrutiny those foreign jurisdictions, financial institutions operating outside of the United States, and classes of international transactions or types of accounts that pose particular, identifiable opportunities for criminal abuse." USA Patriot Act § 302(b)(4), 115 Stat. at 297.
The government emphasizes a third basis to distinguish Sealed Case I : the subpoena recipient there would have been compelled to violate the laws of a third country. See Gov't's Reply at 32-33. That distinction, however, supplies a reason both for and against compelling compliance. On the one hand, unlike the banks here, which are based in, and partially owned by, China, the Country X bank could not be sure that Country Y would show restraint when considering whether to punish the bank. Mar. 5, 2019 Tr. at 33:21-34:2. In this light, the case for enforcement is stronger here than in Sealed Case I . On the other hand, as Bank Three argues, compelling a bank to violate its "own nation's law is more prejudicial to international comity." Bank Three Sur-Reply at 18. A Country X bank can shutter the Country Y portion of its business; a Chinese bank cannot leave China. Mar. 5, 2019 Tr. at 79:5-22. In this light, the case for enforcement was stronger in Sealed Case I than here.
Contrary to the government's position, nor does Sealed Case II , alone, dictate the outcome here. See Gov't's Reply at 32-34 ("Sealed Case II controls this case, not Sealed Case I ."). In Sealed Case II , the D.C. Circuit rebuffed a grand jury witness's argument that, as a matter of comity, the witness should not be held in contempt for failing to comply with a subpoena.
Since Societe Nationale , the Restatement of Foreign Relations Law has been updated, but the relevant factors have not changed. See Restatement (Fourth) of Foreign Relations Law § 426 cmt. a.
Bank One cites pieces of this passage for the conclusion that the D.C. Circuit has instructed against evaluating when a foreign law is worthy of respect. Bank One's Sur-Reply at 8. Reading the full text demonstrates that Bank One's conclusion is backward. The D.C. Circuit, although appreciating the unseemliness of the task, understood that evaluating foreign laws is integral to any comity analysis.
Bank One argues that Restatement (Third) of Foreign Relations § 442(2) instructs that sanctions should not ordinarily be imposed against a witness who fails to produce records that are located in a country that prohibits disclosure of the records. Whether or not this is a case for application of the ordinary rule, the Court is not reviewing a motion to hold the banks in contempt. Contempt proceedings may follow but have not yet arrived.
Bank Three, for its part, does not argue as part of the comity analysis that the records request is too broad. The bank did advance that argument in relation to whether the subpoena exceeded the government's authority under
While the Second Circuit vacated this opinion for the district court to reconsider personal jurisdiction over the Bank of China in light of intervening Supreme Court precedent, the circuit "discern[ed] no abuse of discretion" in the district court's "comity analysis pursuant to § 442 of the Restatement (Third) for Foreign Relations Law." Gucci II ,
The MOJ letter also flags the United States' less-than-remarkable history of responding to MLAA requests, Feb. 26, 2019 MOJ Ltr. at 7, a fact merely showing that neither country is satisfied with the other's performance under the MLAA.
The relevant laws include Article 73 of China's Commercial Banking Law, Article 40 of the Regulation on Credit Investigation, Article 28 of the Corporate Deposit Regulations, Article 32 of the Anti-Money Laundering Law, and Article 64 and 66 of China's Cybersecurity Law. Bank One Expert Decl. ¶¶ 50, 52, 57; Bank Two Expert Decl. ¶ 17b, 24-25, 27; Jan. 7, 2019 Bank Three Ltr. at 6, 8-10.
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