Pierre-Hugues Verdier
87 Geo. Wash. L. Rev. 239
In a series of recent cases, the Supreme Court has vigorously applied the presumption against extraterritoriality to curtail the territorial reach of federal statutes. During the same period, however, federal prosecutors have brought an unprecedented wave of criminal cases against foreign banks for activities centered abroad, including benchmark manipulation, tax and sanctions evasion, and money laundering. These cases have led to some of the largest criminal fines ever levied and imposed costly compliance reforms affecting the defendants’ worldwide activities. This Article argues that, from a doctrinal standpoint, these two trends are on a collision course. Indeed, some lower courts have already questioned the compatibility of expansive extraterritorial application of federal criminal law in corporate criminal cases with the Supreme Court’s case law.
The Article then examines whether financial criminal extraterritoriality should be curtailed. It first shows that, because they are initiated and controlled by actors within the executive branch, foreign bank prosecutions do not engage the separation-of-powers rationale that motivates the presumption against extraterritoriality. Although managing foreign bank prosecutions raises unique challenges for the executive due to their implications for foreign relations and financial stability, the experience so far suggests that these implications can be successfully managed without compromising prosecutorial autonomy. From a broader policy standpoint, the Article argues that in a world that lacks a robust system of international financial regulation, extraterritorial criminal prosecutions are an important tool for protecting U.S. interests.
