A major Saudi Arabian bank is challenging a portion of the Patriot Act, claiming it unconstitutionally allows U.S. officials to punish foreign financial institutions that refuse to cooperate with demands for their records.
The challenge comes as part of a motion to quash filed yesterday against the Justice and Treasury Departments at the U.S. District Court for the District of Columbia by Riyadh-based Al Rajhi Bank. It asks Judge Ellen Segal Huvelle to quash an administrative subpoena issued by the U.S. Attorney’s Office for the District of Oregon, which is prosecuting a man accused of conspiring to smuggle $151,000 in travelers and cashier’s checks out of the United States. The checks were allegedly cashed at an Al Rajhi branch in Saudi Arabia.
According to the lawsuit, the prosecutors served Al Rajhi with the subpoena in July requesting information related to the checks. In doing so, they used a section of the Patriot Act which gives investigators the ability to force foreign banks to produce documents located outside the United States without a court order. The bank’s Saudi regulator, however, said that providing the documents would be a criminal offense under the country’s laws, and that the request had not been made through “the appropriate diplomatic channels.”
Nonetheless, Justice Department officials allegedly later told Al Rajhi executives that if they did not comply with the subpoena, the agency would consider options under the Patriot Act “that could adversely affect the bank.” Those included asking the Treasury Department to designate the bank as a money laundering concern, and terminating its “correspondent accounts,” which allow foreign banks to make transactions in the United States.
Al Rajhi, represented by Dewey & LeBoeuf partner Timothy Coleman, argues the section of the Patriot Act at issue allows the Justice and Treasury Departments to issue subpoenas and use penalties to enforce them without a judge’s consent.
“The statute establishes a process that is fundamentally inconsistent with the constitutional requirement that a judicial determination of a subpoena’s reasonableness be made prior to the imposition of any penalty for noncompliance,” the suit states.
Among other arguments, the suit also contends that prosecutors are improperly trying to use an administrative subpoena to gather evidence for a trial, and that the court should quash the subpoena because it would violate Saudi law.
The Justice and Treasury Departments did not immediately return calls requesting comment.
Great post--thanks very much. Sec. 319(b) of the Patriot Act authorizes the U.S. to issue a subpoena to a foreign bank if that bank holds accounts in the U.S. I'm not sure what "appropriate diplomatic channels" the Saudis are referring to in your post, but my reading of Patriot is that Treasury or the AG simply serves subpoena to the bank's representative in the U.S. I don't see where diplomatic consulation is required by Patriot.
Anyway, I look forward to any updates on Judge Huvelle's decision, and I suspect that readers of Money Jihad blog (and Creeping Sharia, Atlas Shrugs, Infidel Bloggers Alliance, et al) would also be keen to hear any updates as this case progresses because it appears that Al Rajhi Bank has something to hide.
Posted by: American Delight | February 14, 2010 at 07:36 PM