Navigating the conflict between the Anti-Money Laundering Act of 2020 and the French Blocking Statute

The Anti-Money Laundering Act of 2020 (AMLA) gives the US Department of Justice (DOJ) the power to subpoena the records of foreign banks with correspondent accounts in the US. This power, if used, makes it much easier and quicker for the US government to access foreign records, and will likely increase foreign record requests. However, it remains to be seen, how the US government's new tool will fare against conflicting foreign rules. Most notably, the French Blocking Statute imposes criminal penalties if a person or entity directly communicates information which is aimed at providing evidence in the context of foreign proceedings. The French Blocking Statute is thus at odds with the new AMLA, and counsel and companies will need to be prepared to navigate this conflict.

The Anti-Money Laundering Act of 2020

On January 1, 2021, Congress enacted the AMLA as part of its efforts to prohibit money laundering and terrorist financing. Section 6308 of the AMLA grants the DOJ and the US Department of the Treasury (Treasury) new subpoena authority over foreign banks with correspondent accounts in the United States. The DOJ and the Treasury can now request "any records relating to the correspondent account or any account at the foreign bank." This subpoena power was previously limited to records related to the correspondent account but now extends to records maintained outside of the United States.

Pursuant to AMLA Section 6308, a foreign bank that receives such a request may petition the federal courts for relief but the grounds for obtaining relief are expressly limited. For example, a mere conflict with foreign bank secrecy or confidentiality laws, without more, is not grounds for quashing or modifying the subpoena. The AMLA also brings severe penalties: noncompliance with a subpoena may result in losing access to US banking services, fines, penalties and foreign banks may be fined up to US$50,000 per day for each day of noncompliance with the subpoena. There are potential additional penalties if noncompliance exceeds 60 days. In addition, the AMLA requires US financial institutions to terminate its correspondent relationship with a foreign bank that fails to comply with a subpoena. If the US financial institution fails to do so, it may be fined up to US$25,000 per day.

Historical methods of obtaining evidence overseas

Before the AMLA, the US government primarily obtained foreign bank records through a mutual legal assistance treaty (MLAT) or through letters rogatory. MLATs are treaty-based mechanisms for seeking foreign law enforcement cooperation and assistance in support of an ongoing criminal investigation or proceeding. Governments intentionally restrict access to assistance through MLATs to prosecutors, government agencies that investigate criminal conduct and government agencies that are responsible for matters ancillary to criminal conduct, including civil forfeiture. In the US, MLAT requests proceed through the DOJ's Office of International Affairs, which then reviews and sends the requests to the foreign central authority designated by the relevant MLAT. The foreign central authority, in turn, reviews the request and if it deems the request compliant, it executes the request. Accordingly, the AMLA enables the US government to forgo an MLAT request and request records directly from foreign banks with corresponding US accounts during the investigative stage.

Letters rogatory, in contrast, have a considerably broader reach than MLATs because they can be issued by US federal and state courts as part of criminal, civil and administrative proceedings, can be requested by anyone and can be sent to US federal and state courts by any foreign or international tribunal or "interested person." Letters rogatory are only available once formal proceedings have commenced and not during the investigative, pre-charging stage of criminal proceedings. While letters rogatory can be used, US prosecutors typically prefer to use MLATs as they are more efficient and can be used in the pre-indictment stage.

The French Blocking Statute

The French Blocking Statute is a criminal provision that prohibits, subject to treaties, international agreements or applicable laws and regulations, any person from making any request or communication in writing, orally or in any form concerning economic, commercial, industrial, financial or technical documents or information and which is aimed at providing evidence in judicial or administrative proceedings in a foreign country. Furthermore, the French Blocking Statute requires any person or entity that receives a document production request from a foreign court to inform the Minister of Foreign Affairs. Violating the French Blocking Statute may result in six months' imprisonment and/or an €18,000 fine (€90,000 for legal entities).

When there has been a conflict between the French Blocking Statute and US discovery rules, the courts have traditionally applied a balancing test. In Société Nationale Industrielle Aerospatiale v. US District Court, 482 US 522 (1987), the US Supreme Court held that US courts may order parties to produce notwithstanding the French Blocking Statute or bank secrecy law, provided the courts apply a balancing test considering whether the US interests in obtaining the evidence outweigh France's interests reflected in the French Blocking Statute.

Future implications

One question is whether there will be a conflict between the powers granted to the DOJ and Treasury under the AMLA and the French Blocking Statute. As discussed above, the US Supreme Court has already held that, in certain circumstances, US courts may order French companies to produce documents even if doing so violates the French Blocking Statute. As a result, counsel and companies should consider how best to make arguments to the DOJ about comity and other factors that militate in favor of continuing to use the MLAT process. While the MLAT process has traditionally been cumbersome, counsel can work to streamline the process and thereby obviate the need to confront a conflict between the laws of two sovereign nations. French companies may also liaise with their supervisory authority or, more generally, the SISSE (Service de l'information stratégique et de la sécurité économiques), the mission of which is to ensure the application of the French Blocking Statute.

Special thanks to law clerk Kelly Lin (New York) for her assistance in the preparation of this content.