Patriot Act Subpoenas: Reinvigorated and Reaching Across Borders

The override of former President Trump's veto of the National Defense Authorization Act of 2021 resulted in the enactment of broad amendments to the US anti-money laundering regime. Among the amendments are provisions to bolster a seldom-used authority of the government to demand information from non-US banks with correspondent accounts in the United States. These amendments raise questions about applicability of the principle of comity and considerations of personal jurisdiction that have previously applied to the US government's attempts to compel information from a non-US bank without a physical presence in the United States. Non-US banks should understand the practical consequences of this expanded authority.

In 2001, under the USA PATRIOT Act, Congress granted the Secretary of the Treasury and the Attorney General sweeping new powers to demand information from non-US banks that maintain correspondent accounts in the United States.¹ These new powers, commonly called Patriot Act subpoenas, gave the US government access to any records of the non-US bank related to correspondent accounts, including "records maintained outside of the United States relating to the deposit of funds into the foreign bank."² It was an innovative attempt to leverage the centrality of the US financial system to gain access to information that would otherwise be beyond law enforcement's reach.

However, despite its innovativeness and broad reach, Patriot Act subpoenas were issued comparatively rarely. According to the Department of Justice ("DOJ"), despite the comparative strengths of Patriot Act subpoenas, obtaining information under those subpoenas in a manner that was legally admissible proved to be difficult, resulting in protracted negotiations in litigation. Ultimately, in some cases, law enforcement was unable to obtain the desired records.³ To address these issues, the DOJ proposed a series of amendments to enhance the ability of US investigators to obtain overseas records as a form of legally admissible evidence.

On January 2, 2021, the Senate voted to override former President Trump's veto of the National Defense Authorization Act of 2021 ("NDAA"). As a result, some of the most significant amendments to the US anti-money laundering ("AML") regime in recent years became law.⁴ Among the amendments was the DOJ's proposal to amend the Patriot Act Subpoena authority, adopted almost entirely as originally proposed by the DOJ.

The amendments expand the scope of the Secretary of the Treasury and the Attorney General's authority to subpoena a non-US bank's records related to not only the bank's correspondent account in the United States, but to any records related to any account at the foreign bank that are the subject of certain enumerated types of enforcement actions. The amendments also provide the US government more expansive tools for enforcing compliance with subpoenas, including the ability to seek civil contempt findings and issue civil penalties.

The amendments to the Patriot Act subpoena authority contained in the NDAA greatly expand the scope of the authority and add more teeth to its enforcement.