Archives for April 2018

21st Annual IBA Transnational Crime Conference

April 25, 2018 by Zarine Kharazian Leave a Comment

16-18 May 2018, Sheraton Grand, Krakow, Poland

A conference presented by the IBA Criminal Law Committee and the IBA Business Crime Committee

This event will cover some of the hottest criminal and anti-corruption topics facing lawyers in a digital age, including exploration of current legal disputes and new issues for the future.

The conference offered you unparalleled networking opportunities with criminal defence and regulatory practitioners, prosecutors, in-house counsel, international business crime lawyers, compliance officers and law enforcement officials from around the world.

TOPICS INCLUDE:

Deferred Prosecution Agreements and other negotiated settlements: Protecting the rights of corporations and individuals
Anti-corruption developments around the globe
Double jeopardy in transnational crime
A new era for attorney-client privilege
How to react to cybercrime
Managing compliance monitors
Sanctions
Asset seizure
Developments in Criminal Tax

Find more information and register online here.

U.S. Supreme Court Rules 5-4 that the Alien Tort Statute Cannot Be Used To Sue Foreign Corporations

April 24, 2018 by Zarine Kharazian Leave a Comment

In a 5-4 ruling, the U.S. Supreme Court ruled today that the Alien Tort Statute cannot be used to sue foreign corporations. With Justice Kennedy writing for the majority, the Court affirmed the Second Circuit’s decision to dismiss a lawsuit against Arab Bank PLC, a Jordanian financial institution with a New York branch. The litigants claimed that the bank had facilitated transactions that had benefited terrorists that had committed attacks in Israel and the Palestinian territories. Kennedy was joined in his opinion by the four other conservative justices on the Court.

Ensconced in the Judiciary Act of 1789, the ATS reads: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” Kennedy notes that the ATS was relatively obscure and only enacted sparingly over its first 190 years; after the horrors of World War II and the ensuing Nuremberg trials, however, the courts “began to give some redress for violations of international human-rights protections that are clear and unambiguous.” (9)

The petitioners in the Arab Bank case are plaintiffs in five lawsuits suits filed against Arab Bank in the U.S. District Court for the Eastern District of New York. The majority of plaintiffs are foreign nationals, and the majority of accusations they levy against the bank involved actions that occurred entirely overseas. In particular, the plaintiffs allege that the bank maintained accounts for terrorist and militant groups, notably Hamas, and their front groups, as well as that the bank allowed the funds to be used to compensate the families of suicide bombers. The only allegation that involves actions committed on U.S. soil relates to the claim that the bank used its New York branch to clear dollar transactions that ultimately benefited terrorists.

Up until now, there had been a circuit split on whether the ATS applies to foreign corporations. While the Fourth, Seven, Ninth, and D.C. Circuits have all ruled that the ATS does apply to foreign corporations, the Second had ruled that the Supreme Court should decide the question. The Supreme Court, in ruling in favor of Arab Bank, ultimately concluded that the ATS does not extend liability, whether it be criminal or civil, for international human rights violations to foreign corporations.

The case is Jesner v. Arab Bank. For the full opinion of the Court, see here. There will be more analysis of the full opinion in the April issue of the International Enforcement Law Reporter.

VIII Summit of the Americas Commitment on anti-Corruption

April 24, 2018 by Bruce Zagaris Leave a Comment

On April 14, 2018, during the VIII Summit of the Americas, the heads of government agreed to the Lima Commitment with respect to “Democratic Governance against Corruption.”

The commitment includes provisions to reinforce democratic governance, including” the strengthening of democratic institutions for the prevention of and fight against corruption in the Hemisphere.” It comes at a time when many of the governments in the hemisphere, such as Honduras, Venezuela, and Brazil are undergoing a crisis of stability largely due to corruption issues.

The commitment has a section on “transparency, access to information, protection of whistleblowers, and human rights, including freedom of expression.” The section commits to increasing national anti-corruption measures or systems and strengthening conditions for the effective participation of civil society, social organizations, academia, the private sector, citizens, and other social actors in monitoring government performance, including the development of prevention mechanisms, channels for reporting possible acts of corruption and facilitating the work of watchdogs including other citizen oversight mechanisms, and incentivizing the adoption of digital means of participation.” One of the initiatives is to promote the establishment of an Inter-American Data Program within the OAS in order to strengthen open information policies and increase the capacity of governments and citizens to prevent and fight corruption.

A section concerns “financing of political organizations and election campaigns.”

A section on the “prevention of corruption in public works and public procurement and contracting.” One element is to request that the Joint Summit Working Group (JSWG), together with other relevant regional and international bodies, develop an infrastructure platform to facilitate the exchange of experiences, training and cooperation programs for project monitoring and development, feasibility and risk analysis studies, transparent bidding procedures, and government procurement.”

A section focuses on “international legal cooperation: the fight against bribery, international corruption, organized crime, and money laundering; and asset recovery.” Among the action agreed is continuing to implement, prior to the IX Summit of the Americas, the applicable recommendations from the specific rounds of the Implementation Review Mechanism of the United Nations Convention against Corruption (UNCAC) as well as the recommendations from the successive rounds of the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC).

A section focuses on “strengthening of Inter-American Anti-Corruption Mechanisms.” One action item is to identify resources to strengthen its operations with a view to more efficiently address the new challenges that corruption poses in the Hemisphere. The document contains a series of recommendations, such as calling on MESICIC to promote instruments for the exchange and dissemination of best practices, technical capacities, and measures to strengthen legal and institutional frameworks to prevent and combat corruption that will contribute to the implementation of its recommendations.

The final section concerns “follow-up and reports.” The Lima Commitment requests the Joint Summit Work Group (JSWG) to help States with resources and technical capacity-building, so that they can implement the commitments undertaken at the Summit in the area of strengthening democratic governance and anti-corruption efforts. The section calls upon the private sector in general to adopt similar initiatives as those in the “Private Sector Commitment to Transparency” of the American Business Dialogue presented at the III CEO Summit of the America.

The challenges for the stakeholders in the VIII Summit of the Americas will be to garner sufficient resources, implementation, and enforcement mechanisms, so that the lofty commitments can come to fruition. In particular, the Organization of American States, which provided much of the organizational work for the Summits of the Americas, has limited resources. In addition, the JSWG has limited resources and authority to implement the provisions of the commitment. The Summits of the Americas illustrate an effort by governments, the private sector, and civil society to develop government networks. In the VIII Summit of the Americas, the prioritization is on anti-corruption. It is quite appropriate since the prosecutions in Operation Car Wash and especially of heads of government (Dilma Rousseff) and former heads of government (Lula da Silva) have generated an agreement to cooperate in the enforcement of the Oderbrecht case and has triggered investigations and resignations of high-level officials in Ecuador and Peru, as well as a proliferation of prosecutions and civil cases for corruption. There will be a more comprehensive look at the Lima Commitment in the current issue of the IELR journal.

Opinion Analysis: In 5-4 Ruling, SCOTUS Strikes Down Part of Immigration and Nationality Act

April 20, 2018 by Zarine Kharazian 1 Comment

On Tuesday, the Supreme Court ruled that part of a federal law used to deport immigrants who have been convicted of aggravated felonies is unconstitutionally vague, and thus violates the Fifth Amendment’s Due Process Clause. The case, Sessions v. Dimaya, concerns the Immigration and Nationality Act (INA).

The INA defines “aggravated felony” by listing types of offenses, often cross-referencing federal criminal statutes. One type of offense listed is a “crime of violence… for which the term of imprisonment is at least one year.” 18 USC § 16 provides the definition of “crime of violence” for the purposes of the INA. § 16 consists of two clauses, which are commonly referred to as the elements clause and the residual clause. The former states that “(a) an offense that has as an element the use, attempted use, or threatened use of physical force against the person or property of another,” while the latter states that “(b) any other offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense.”

The respondent in the case, James Dimaya, is a lawful permanent resident with two convictions of first-degree burglary under California law. The DOJ determined that burglaries constituted “crimes of violence,” and that Dimaya was thus subject to deportation under the INA. The immigration court had ruled that Dimaya was deportable based on the crime of violence grounds.

Dimaya appealed. While his appeal was pending, the Supreme Court ruled in Johnson v. United States. the residual clause of another law, the Armed Career Criminals Act (ACCA), unconstitutionally vague, and thus in violation of the Fifth Amendment’s Due Process Clause. The Ninth Circuit, citing the Johnson decision as precedent, ruled the residual clause of the INA unconstitutionally vague as well.

Now, the Supreme Court, in a 5-4 decision that has Justice Neil Gorsuch siding with the liberal wing of the Court, has affirmed the Ninth Circuit’s ruling.

Kagan’s Opinion for the Court

Justice Elena Kagan wrote for the majority in Dimaya. As Kagan explains:

I[n sum, §16(b) has the same “[t]wo features” that “conspire[d] to make [ACCA’s residual clause] unconstitutionally vague.” Id., at ___ (slip op., at 5). It too “requires a court to picture the kind of conduct that the crime involves in ‘the ordinary case,’ and to judge whether that abstraction presents” some not-well-specified-yet-sufficiently-large degree of risk. Id., at ___ (slip op., at 4). The result is that §16(b) produces, just as ACCA’s residual clause did, “more unpredictability and arbitrariness than the Due Process Clause tolerates.

Here Kagan reasons that 18 USC § 16’s residual clause is unconstitutionally vague for the same reasons that the ACCA’s residual clause was:

It requires that a court imagine what a crime entails in an “ordinary case.” (In reference to this point, Kagan asks, “We can as well repeat here what we asked in Johnson: How does one go about divining the conduct entailed in a crime’s ordinary case? Statistical analyses? Surveys? Experts? Google? Gut instinct?“) and
16(b), much like the ACCA, requires still an even further degree of abstraction – it requires the judge to determine whether the imagined “ordinary case” presented a sufficient – but still undefined — degree of risk.

Kagan’s opinion was joined by Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Neil Gorsuch, in part.

Gorsuch’s Concurring Opinion

Gorsuch concurs with the majority that the residual clause of § 16 is unconstitutionally vague. “California burglary,” he writes, “applies to everyone from armed home intruders to door-to-door salesmen peddling shady products. How, on that vast spectrum, is anyone supposed to locate the ordinary case and say whether it includes a substantial risk of physical force?” Where Gorsuch diverges from Kagan and the majority, however, is in his reasoning. Gorsuch reasons that the “ordinary case” abstraction that the INA requires on the part of a judge violates the fair notice standard – a standard set by the… Share on X The fair notice standard holds a law in violation of the Due Process Clause if it does not give an individual “fair notice” of what actions it criminalizes. Gorsuch writes with respect to 18 USC § 16, “[t]he implacable fact is that this isn’t your everyday ambiguous statute. It leaves the people to guess about what the law demands—and leaves judges to make it up.”

Roberts’s and Thomas’s Dissents

Chief Justice Roberts dissented on the grounds that the Dimaya case is meaningfully distinct from the ACCA under scrutiny in Johnson. In particular, Roberts argues that §16(b) is less vague in three ways:

Regarding how to estimate the risk a crime poses 16(b) asks for a “commonsense inquiry of simply, “risk,” while the ACCA residual clause required estimate of “serious potential risk;”
16(b) requires in the risk analysis that the judge consider the risk of “physical force” against another person or property be likely, while the ACCA only required consideration of the risk that “injury will result from a person’s conduct;” and
16(b) proposes a “temporal limit” that the risk of physical force arises “in the course of committing the offense.”

Roberts was joined by Justices Kennedy, Thomas, and Alito.

Thomas, with whom Alito and Kennedy joined in part, also dissented. He agrees with Roberts that §16(b) is not unconstitutionally vague. He diverges from Roberts, however, in arguing that the vagueness doctrine is not consistent with the original meaning of the Due Process Clause. “Section 16(b), as incorporated by the INA, cannot violate th[e Due Process] Clause,” Thomas reasons, “ unless the following propositions are true: The Due Process Clause requires federal statutes to provide certain minimal procedures, the vagueness doctrine is one of those procedures, and the vagueness doctrine applies to statutes governing the removal of aliens. Although I need not resolve any of these propositions today, each one is questionable.”

—

While Gorsuch’s alignment with the liberal wing of the Court may seem surprising, it is consistent with his originalist philosophy, as well as that of his predecessor, Justice Antonin Scalia. Share on X Justice Scalia also sided with the liberal wing of the Court in Johnson v. United States. Writing for the majority In Johnson, Scalia argues: “We are convinced that the indeterminacy of the wide-ranging inquiry required by the residual clause both denies fair notice to defendants and invites arbitrary enforcement by judges. Increasing a defendant’s sentence under the clause denies due process of law.” Gorsuch, in his concurring judgement in Dimaya, echoes his originalist counterpart.

The Trump administration’s focus on immigration enforcement means the Court will likely intervene in more criminal removal cases in the near future. The Roberts Court immigration record has been mixed thus far, with the narrow majority ruling to curb immigrants’ rights in some cases, such as Jennings v. Rodrieguez, and expanding immigrants’ rights in others, as they did this week in Dimaya.

While Montgomery County, MD, Fights to Provide Legal Aid to Immigrants, the DOJ Seeks to Remove It

April 19, 2018 by Madeline Henshaw-Greene 1 Comment

Montgomery County is one of Maryland’s most diverse and populous jurisdictions, where on average three out of ten residents were not born in the United States. Council members are currently debating whether to implement a controversial proposal that would allocate nearly $400,000 from the county’s general fund to a non-profit that provides legal funds to immigrants in detention. The program would only be made available to Montgomery County residents who are facing deportation, have a household income well below the poverty line, and have not been convicted of any major crimes. Despite these limitations, as well as the county’s significant percentage of immigrants, council members are already expecting objections to the proposed plan.

Hans Riemer, the Montgomery County Council President, defended the proposal by pointing out that “‘the federal government is targeting our residents and our communities’”, and emphasizing the need to respond accordingly. Claudia Cubas, the litigation director of the Capital Area Immigrants’ Rights Coalition, the nonprofit in question, noted that it is the county’s duty to protect its diversity by allowing immigrants the right to due process. The issue is scheduled for debate at a public hearing on May 1st and, if passed, would join a series of similar efforts, including statewide programs for legal representation for immigrants facing deportation hearings in New York and California. In Maryland alone, Baltimore and Prince George’s County have already joined the SAFE Cities Network, which also provides publicly funded lawyers to immigrants in 11 jurisdictions.

While Montgomery County is seeking to provide legal assistance to immigrants facing possible deportation, the Department of Justice is attempting to do just the opposite. Immigration and Customs Enforcement, or ICE, is taking steps to end a federally funded Legal Orientation Program that was put into effect under President Bush in 2003, one which seeks to educate immigrants about their rights and options in court in both English and Spanish. In a memo published in November of last year, the Justice Department praised the initiative for providing assistance to all parties in detainee-deportation cases, and even provided access to lawyers and paralegals from the program to an additional 30 detention centers across the country. Now, according to another government memo, the DOJ is suspending the program to order to review its effectiveness.

Research into the initiative’s effectiveness at the time of the November memo showed that its beneficiaries were more likely overall to have legal representation and complete their cases more efficiently than other detainees who were not affiliated with the program. Although the program costs 8 million dollars a year, it saves the government millions more in detention costs by helping immigrants avoid unnecessary delays, according to the Institute of Justice. It is often the only assistance that immigrants are given outside the court, and provides them with access to attorneys and paralegals that otherwise would be impossible to afford.

In defending their decision to end the program, federal officials say that it is unnecessary since immigration judges already inform immigrants of their rights while in court. It is worth noting, however, that the Justice Department under President Trump has already expressed concerns about the backlog of immigration cases in the federal justice system, and has even placed quotas on federal immigration judges to complete a certain number of cases a year. If that is the case, then the department’s decision to end a program shown to make deportation cases more efficient calls into question their true motives for suspending the initiative.

Attorney General Delivers Remarks on Immigration Enforcement to Border State Sheriffs

April 17, 2018 by Madeline Henshaw-Greene Leave a Comment

Attorney General Jeff Sessions met with a coalition of sheriffs from border states in Las Cruces, New Mexico, on April 11th to deliver a set of highly politicized remarks that illustrated the Trump administration’s hardline, fear-based approach to illegal immigration. Sessions wasted no time in portraying the immigration situation as a black and white, us versus them issue. He thanked the sheriffs present for acting as “the thin blue line that stands between law-abiding people and criminals”, and praised them for protecting the country “from drugs and violence”.

The attorney general appeared to echo remarks made by President Trump on the campaign trail regarding immigrants from Mexico by describing the types of people who come across the border as drug traffickers, gang members, and “other criminals who bring drugs, guns, and gang violence into our communities.” He also made the claim that most of the drugs currently in the U.S., specifically heroin, cocaine, meth, and fentanyl, come from over the border. This is false, as the majority of these drugs are actually smuggled in through ports of entry, which a border wall would not fix. For more on Sessions’ attempts to blame the drug crisis on illegal immigrants, click here.

Attorney General Sessions also used the speech as an opportunity to promote one of the administration’s most controversial and as yet unrealized promises, the border wall. Sessions blamed Congress for failing to take action on the wall and for providing illegal immigrants with an open invitation to cross the border. He criticized the Obama administration for allowing immigrants to exploit the “credible fear” policy, which allows immigrants to remain in the country legally if they can prove that they were endangered in their home countries. The Trump administration, with Sessions at the helm, is already doing everything in their power to limit the number of asylum seekers allowed to remain in the country. One strategy, which the attorney general mentioned briefly in his speech, is to put quotas on federal immigration judges to complete a certain number of immigration cases a year. For more on Sessions’ attempts to expel illegal immigrants, click here.

To read Sessions’ full speech, click here.

Subscribe to the International Enforcement Law Report for more in-depth analysis on the Trump administration’s efforts to suppress immigration.

Event Invitation – ENTREPRENEURS ON THE INTERPOL WANTED LIST: BALANCING LAW ENFORCEMENT WITH DUE PROCESS

April 16, 2018 by Zarine Kharazian Leave a Comment

The DC Chapter of the Association of Certified Financial Crime Specialists (ACFCS)

invites you to join us for a

Brown-Bag Lunch Event

On ENTREPRENEURS ON THE INTERPOL WANTED LIST: BALANCING LAW ENFORCEMENT WITH DUE PROCESS

This program will discuss (1) international police cooperation via INTERPOL’s channels: the mechanism and legal framework; (2) the principle of INTERPOL’s neutrality; (3) loopholes in INTERPOL’s rules that make the abuse of its channels possible; (4) member countries known for abusing INTERPOL; (5) the lack of transparency in INTERPOL’s disclosures; (6) why entrepreneurs become victims of INTERPOL abuse; (7) the rights of individuals on the international wanted list; (8) INTERPOL’s recent reforms and what else must be done to redress abuses.

DATE/TIME: May 8th, 2018 at Noon. (The program will start promptly at 12:15 so please arrive in time to take your seats.)

LOCATION:

Reed Smith LLP

1301 K Street Northwest

# 1100E

Washington, DC 20005

Speakers:

Mr. Bruce Zagaris (moderator) – Berliner, Corcoran & Lowe LLP
Mr. Yuriy Nemets, Esq – Law Office of Yuriy L. Nemets, PLLC and publisher of http://rednoticeabuse.com/
Ms. Michelle Estlund, Esq. – Estlund Law, Coral Gables, Florida and publisher of www.rednoticelawjournal.com
Mr. Theodore R. Bromund – Senior Research Fellow in Anglo-American Relations, Margaret Thatcher Center for Freedom
Mr. Matthew Klecka – Partner, Ernst & Young (formerly with USDOJ)

Please note: THIS IS A BROWN-BAG EVENT. You are encouraged to bring your own lunch. Beverages are generously provided by Reed Smith.

You may register for the event here.

U.S. Leads with Additional Sanctions against Russia, Targeting Putin’s Inner Circle

April 11, 2018 by Bruce Zagaris Leave a Comment

On April 6, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated seven Russian oligarchs and 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank.[1]

Simultaneously with the action, OFAC issued two general licenses (General Licenses 12[2] and 13[3] as well as related FAQs)[4] to minimize immediate disruptions to U.S. persons, partners, and allies.

The designation freezes all assets subject to U.S. jurisdiction of the designated individuals and entities, and of any other entities blocked by operation of law as a result of their ownership by a sanctioned party. U.S. persons are generally prohibited from dealings with them as well as with entities owned 50% or more by them directly or indirectly, unless authorized by an OFAC license. U.S. persons must block the property and interests in property of the SDNs that come within their possession or control. In addition, under § 228 of CAATSA, non-U.S. persons could be subject to sanctions for knowingly facilitating significant transactions for or on behalf of the individuals or entities blocked.[5]

Designated Russian Oligarchs and Government Officials

The list targets Putin’s inner circle. The seven oligarchs include Vladimir Bogdanov, the Director General and Vice Chairman of Surgutneftegaz, a vertically-integrated oil company, and Oleg Deripaksa, who operates an energy company, has a Russian diplomatic passport, and has been investigated for money laundering, and accused of threatening the lives of business rivals, illegally wiretapping a government official, and participating in extortion and racketeering.

Among the long list of Russian government officials that OFAC designated are: Andrey Akimov, Chairman and the Management Board of thestate-owned Gazprombank; Mikhail Fradkov, President of the Russian Institute for Strategic Studies (RISS), a major research and analytical center established by the President of the Russian Federation, providing information support to the Presidential Administration, Federation Council State Duma, and Security Council; and Sergey Fursenko.

Analysis

In effect, the new OFAC action prevents the oligarchs from traveling to the U.S., doing business, or even opening a bank account with any major company or bank in the West. In addition, it restricts foreign individuals from facilitating transactions on their behalf.[6]

Since many of Russia’s oligarchs have significant personal and financial ties to the West, where they own hundreds of millions of dollars in property, the new action heightens the pressure on them. Some of the targeted oligarchs, however, have likely taken action to protect some their assets in the wake of prior OFAC announcements.

U.S. Treasury Secretary Steven T. Mnuchin characterized the new action as responding to Russian occupation of Crimea and instigation of violence in eastern Ukraine, furnishing the Assad regime with material and weaponry as they bomb their own civilians, trying to subvert Western democracies, and malicious cyber activities.[7] He not mentions the poisoning of Sergei V. Skripal, a former Russian double agent, and his daughter, in response to which the U.S. expelled 60 Russian diplomats, prompting Russia to retaliate by closing its Seattle consulate.

According to Forbes, Russian billionaires have lost over $12 billion in one day as a result of the U.S. sanctions. The Russian stock market has fallen due to the new sanctions on Russian businessmen. Out of the oligarchs targeted, Oleg Deripaska, who owns En +, and US Rusal, among other companies, has been affected the most. After the announcement of the sanctions on April 6, 2018, quotations of the aluminum producer fell by more than 50% on the Hong Kong Stock Exchange, and Deripaska’s wealth decreased by $1.3 billion.[8]

Russian Prime Minister Dmitry Medvedev instructed the Government to prepare options for supporting companies of the oligarchs, whose companies were targeted by new U.S. sanctions. On April 9, 2018, Deputy Prime Minister Arkady Dvorkovich announced that the Russian Government would support the companies that fell under U.S. sanctions.[9]

According to the press-secretary of the Head of state Dmitry Peskov, Russian President Vladimir Putin does not plan to meet with oligarchs who are put on the U.S. sanctions list. However, such a meeting may appear in his schedule.[10]

According to the International Consortium of Investigative Journalists, Deripaska and Arkady Rotenberg, who was designated in March 2014, have used offshore legal entities to hide assets.[11] The U.S. or other persons dealing with such offshore legal entities will need to use due diligence to avoid being subject to sanctions themselves.

A full version of this article will appear in the April issue of the International Enforcement Law Reporter.

[1] U.S. Department of the Treasury, Treasury Designates Russian Oligarchs, Officials, and Entities in Response to Worldwide Malign Activity, April 6, 2018.

[2] OFAC, General License No. 12 https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl12.pdf.

[3] OFAC General License 13 https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13.pdf.

[4] For the updated FAQs, see https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#542.

[5] U.S. Department of the Treasury, Treasury Designates Russian Oligarchs, Officials, and Entities in Response to Worldwide Malign Activity, supra.

[6] Gardiner Harris, U.S. Puts New Sanctions on Putin’s Inner Circle, N.Y. Times, Apr. 7, 2018, at A, col. 1.

[7] U.S. Department of the Treasury, Treasury Designates Russian Oligarchs, Officials, and Entities in Response to Worldwide Malign Activity, supra.

[8] Russian oligarchs lose almost $12 billion in one day, Crime Russia, Apr. 9, 2018 https://en.crimerussia.com/oligarchs/russian-oligarchs-lose-almost-12-billion-in-one-day

[9] Russian Government to support companies under U.S. sanctions, Crime Russia, Apr. 9, 2018 https://en.crimerussia.com/oligarchs/russian-government-to-support-companies-under-u-s-sanctions-/

[10] Id.

[11] International Consortium of Investigative Journalists, The U.S. list of wealthy Russians and our offshore investigations, Feb. 5, 2018.

The CLOUD Act: Arguments For and Against

April 10, 2018 by Zarine Kharazian Leave a Comment

The DOJ and Microsoft have both filed motions to dismiss as moot the seminal data privacy case before the Supreme Court this term, United States v. Microsoft Corp. At issue in the case is whether the warrant provisions of the Stored Communications Act (SCA) apply extraterritorially, such that they compel Microsoft, an electronic service provider to produce private electronic communications stored on servers in Ireland for the United States government.

In their respective motions, the two parties agree that there was no longer a “live case or controversy” with respect to the question presented, due to a piece of recently-enacted legislation called the Clarifying Lawful Overseas Use of Data Act (CLOUD Act). Congress attached the bipartisan legislation to an omnibus spending bill, and it was signed into law on March 23, 2018. The act states as follows:

“A provider of electronic communication service or remote computing service shall comply with the obligations of this chapter to preserve, backup, or disclose the contents of a wire or electronic communication and any record or other information pertaining to a customer or subscriber within such provider’s possession, custody, or control, regardless of whether such communication, record, or other information is located within or outside of the United States.”

The CLOUD Act also includes provisions governing foreign governments’ access to U.S.-held data. Human rights and privacy organizations have opposed this part of the act the most. The CLOUD Act authorizes the president to enter into reciprocal data-sharing “executive agreements” with foreign governments. Human rights and privacy organizations like the ACLU, EFF and Amnesty International have denounced the executive agreement mechanism for giving unfettered access to U.S.-held data to foreign governments.

It is worth noting, however, that the act puts forth significant requirements that foreign governments must meet in order to be considered a “qualifying foreign government” under the CLOUD Act. Among other requirements, the government in question must:

Have domestic law that “affords robust substantive and procedural protections for privacy and civil liberties in light of the data collection and activities of the foreign government that will be subject to the agreement;” and
Have instituted “appropriate procedures to minimize the acquisition, retention, and dissemination of information concerning United States persons subject to the agreement;” as well as that;
The government adopts procedures that guard against targeting, either direct or indirect, of a U.S. citizen or person located in the United States.

Furthermore, the act specifies further criteria for what constitutes a qualifying order for the disclosure of U.S.-held data to a foreign government. In particular, the order must:

Be for the purpose of “obtaining information relating to the prevention, detection, investigation, or prosecution of serious crime, including terrorism;”
Identify a “specific person” or other “specific identifier” as the object of the order;
Comply with the requesting country’s domestic law;
Be subject to independent oversight by a judge, court, magistrate, or other legal authority; among other qualifications.

One of the best dialogues on the act unfolded in a series of response essays on Lawfare.

Jennifer Daskal and Peter Swire argued in an initial essay posted on Lawfare that the CLOUD Act will enhance, rather than dilute, privacy and human rights protections on balance. They note that the status quo for requesting evidentiary data across borders – the MLAT process – is a cumbersome diplomatic channel ill-equipped for the sheer number of crossborder data requests currently in the system. As a result, countries are growing more and more frustrated with the MLAT process, which they view as not only cumbersome, but “imperialistic,” since it often requires getting a warrant from a U.S- based judge even if the data requested concerns a local criminal investigation.

Countries are thus turning to alternative measures to bypass the MLAT system, such as data localization laws that require that data be stored within the country. Data localization laws have been accused by critics of veiling anti-democratic motivations on the part of the instituting government – such as allowing for closer surveillance and identification of the local political dissidents. Furthermore, data localization laws lead to data decentralization, which in turn leads to multiple points of vulnerability in data providers’ security and privacy infrastructure.

Daskal and Swire also note that the CLOUD Act subjects foreign governments to regular compliance reviews by U.S. officials, which they praise as a novel opportunity for the U.S. to monitor how foreign governments use the data and guard against abuse.

Neema Singh Guliani from the ACLU and Naureen Shah from Amnesty International argue in a response essay that the CLOUD Act puts the privacy and security of individuals, particularly human rights activists at risk. “The very premise of the current CLOUD Act,” they write, “the idea that countries can effectively be safe-listed as human-rights compliant, such that their individual data requests need no further human rights vetting—is wrong.” Guliani and Shah argue that the CLOUD Act has inadequate safeguards for wide range of scenarios, such as when a country experiences a “rapid deterioration in human rights,” like Turkey did in mid-2016 following a coup attempt.

For the IELR Blog’s past coverage of the U.S. v Microsoft case, see here. For the full text of the Cloud Act, see here.

Former Catalan President Detained By German Police, Later Released

April 6, 2018 by Sheel Patel Leave a Comment

Update: Puigdemont was released on bail on Thursday. The court in Schleswig-Holstein rejected Spain’s “rebellion” charge as grounds for extradition.

On Sunday, March 25 former Catalan president Carles Puigdemont was detained by German police. This arrest was made on the grounds of the Spanish European Arrest Warrant (EAW), which mandates EU countries to arrest the suspect in question. Once in custody, the suspect is then put on trial to determine the proper punishment.

In the case of Puigdemont, Spain is asking for his extradition on the grounds of inciting rebellion and misappropriating public funds. According to the rules of the European Arrest Warrant, countries must extradite for a certain list of offenses, but rebellion is not one of them. Because of this, Puigdemont must meet the German criteria for extradition. This is difficult for Germany because their law requires the suspect to have committed violent acts in order to be charged for high treason, a comparable crime to the Spanish rebellion. Puigdemont, however, has not used violence, making German extradition under the EAW a complex matter.

If Puigdemont is indeed extradited, Germany would most probably do so for the misappropriation of public funds that the former Catalonian president is accused of. According to the EAW, once a person is extradited, the country can only try them for the charge they were extradited on. This means that Spain can only try and persecute him for misappropriation of public funds, which carries a significantly lower sentence than rebellion.

Whether or not Germany is willing to do that is unclear, however, because of the significant repercussions of a potential extradition. If Puigdemont is extradited, the legal precedence it establishes may create a slippery slope for EU countries who are trying to punish political rivals. Countries like Scotland, Belgium, and Switzerland may feel the most immediate pressure, as a number of Puigdemont’s allies have fled to those countries and are also facing EAW’s. The Catalonian secession movement has also polarized Spanish citizens, as a number of separatists have already begun to protest Puigdemont’s arrest. The move to extradite Puigdemont may invigorate and strengthen the separatist movement, which will likely do more harm to Spain.

Sheel Patel is an editorial intern at the International Enforcement Law Reporter.