{"id":1078,"date":"2019-07-31T13:49:45","date_gmt":"2019-07-31T17:49:45","guid":{"rendered":"http:\/\/ielrblog.com\/?p=1078"},"modified":"2019-07-31T13:49:45","modified_gmt":"2019-07-31T17:49:45","slug":"u-s-court-of-appeals-affirms-contempt-order-against-3-chinese-banks-for-subpoena-noncompliance","status":"publish","type":"post","link":"https:\/\/ielrblog.com\/index.php\/2019\/07\/31\/u-s-court-of-appeals-affirms-contempt-order-against-3-chinese-banks-for-subpoena-noncompliance\/","title":{"rendered":"U.S. Court of Appeals Affirms Contempt Order Against 3 Chinese Banks for Subpoena Noncompliance"},"content":{"rendered":"

By Bruce Zagaris<\/em><\/p>\n

On July 30, 2019, the United States Court of Appeals for the D.C. Circuit unanimously affirmed a contempt order against three Chinese banks that failed to comply with subpoenas<\/a> from the U.S. Department of Justice (DOJ).<\/p>\n

On April 30, 2019, the U.S. District Court for the D.C. Circuit unsealed an opinion issued on March 18, 2019, by Chief Judge Beryl A. Howell enforcing grand jury subpoenas and an administrative subpoena against three Chinese banks for records of transactions for a now-defunct Hong Kong-based front company for North Korea\u2019s state-operated company<\/a>.<\/p>\n

While the banks involved are not named in court papers, they were previously reported to be the Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank (SPD).<\/p>\n

In a unanimous ruling, which is under seal, the circuit panel rejected the banks\u2019 arguments that Chinese banking privacy rules and other laws require that requests for customer records in U.S. criminal inquiries be made through a legal assistance agreement between the two countries<\/a>.<\/p>\n

The case grew out of an investigation by the U.S. Department of Justice into Mingzheng International trading Limited, a Hong-Kong entity that allegedly moved $105 million to FTB, a sanctioned North Korean bank, between 2012 and 2015.<\/p>\n

In 2017, a U.S. civil forfeiture action contended that Mingzheng used accounts at the three Chinese banks to transmit the money in violation of sanctions on North Korea.\u00a0 In 2017, the U.S. Treasury sanctioned Mingzheng<\/a>.<\/p>\n

Chinese bank regulatory officials have informed the banks that the only way the banks could comply under Chinese law was through the process established under the bilateral China-U.S. June 19, 2000 Mutual Legal Assistance Agreement (MLAA).\u00a0 The banks have informed the U.S. courts that the Chinese government has ordered them not to provide the requested records.\u00a0 The DOJ visited China in April and August 2018 to discuss China\u2019s repeated failure to respond to MLAA requests, which required the U.S. to proceed through unilateral subpoenas.\u00a0 The DOJ informed the district court that China is unresponsive or much delayed in responding to MLAA requests.<\/p>\n

Judge Howell has fined the three Chinese banks $50,000 a day, although the fines were stayed pending the appeal.\u00a0 In addition, SPD, China\u2019s ninth-largest bank by assets risks losing access to U.S. dollars<\/a>.<\/p>\n

The case constitutes the first known instance in which a U.S. court has upheld subpoenas to a Chinese bank in a sanctions investigation. The affirmance by the appellate court will increase the tension between the U.S. and China over sanctions.\u00a0 Already, the U.S. and China are in a contest over the extradition of Meng Wanzhou from Canada, the CFO and Vice President of Huawei, for allegedly making false statements in connection with Huawei\u2019s transactions and business with Iranian entities in violation of U.S. sanctions.\u00a0 Criminal and civil cases are pending in the U.S. against Huawei for, inter alia, stealing intellectual property of U.S. firms.\u00a0 The U.S. is pressuring countries around the world not to use Huawei for developing 5G technology.<\/p>\n

Meanwhile, as North Korea has taken diplomatic initiatives to break out of its isolation and UN and U.S. sanctions, the U.S. \u2013 through enforcement actions against Mingzheng \u2013 has tried to maintain the pressure against North Korea.\u00a0 The next issue of the IELR will report further on this case.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Bruce Zagaris On July 30, 2019, the United States Court of Appeals for the D.C. Circuit unanimously affirmed a contempt order against three Chinese banks that failed to comply with subpoenas from the U.S. Department of Justice (DOJ). On April 30, 2019, the U.S. District Court for the D.C. Circuit unsealed an opinion issued […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[13,84,83,1],"tags":[],"class_list":{"0":"post-1078","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-international-administrative-penal-law","7":"category-international-evidence-gathering","8":"category-sanctions","9":"category-uncategorized","10":"entry"},"yoast_head":"\nU.S. Court of Appeals Affirms Contempt Order Against 3 Chinese Banks for Subpoena Noncompliance | IELR Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ielrblog.com\/index.php\/2019\/07\/31\/u-s-court-of-appeals-affirms-contempt-order-against-3-chinese-banks-for-subpoena-noncompliance\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"U.S. Court of Appeals Affirms Contempt Order Against 3 Chinese Banks for Subpoena Noncompliance | IELR Blog\" \/>\n<meta property=\"og:description\" content=\"By Bruce Zagaris On July 30, 2019, the United States Court of Appeals for the D.C. 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