FIFA, the U.S. Financial System, and U.S. Jurisdiction Over “Foreign” Parties and Events

U.S. Jurisdiction Underlying Charges Against FIFA 

U.S. law enforcement officials’ surprise announcement last year of U.S. criminal charges against FIFA officials bewildered commentators and futbol fans alike. Sure, FIFA had long been suspected of misdeeds. But how was it that the United States, a famously soccer apathetic nation seemingly removed from FIFA’s alleged wrongs, had authority to enforce its laws against foreign parties and in connection with foreign events?  

In a 2015 news conference about the FIFA charges, FBI Director James Comey explained U.S. jurisdiction this way: “If you touch our shores with your corrupt enterprise, whether that is through meetings or through using our world class financial system, you will be held accountable for that corruption.”

Recent U.S. Bank Disclosure of FIFA-Related Investigation

Last week, a U.S. financial system link to FIFA came into focus when a major U.S.-based bank disclosed that it had received a subpoena from the U.S. Attorney for the Eastern District of New York in connection with alleged FIFA “bribery, corruption and money laundering . . . and the potential involvement of financial institutions in that activity.”

U.S. Dollar transactions and U.S. financial System links triggers of U.S. Jurisdiction

U.S. dollar and financial system dominance facilitate the extraterritorial reach of U.S. law—the U.S. dollar is the world’s preeminent transactional and reserve currency and the U.S. financial system is predominant.[i]  Thus, for example, foreign transactions that are denominated in U.S. dollars and processed through the U.S. financial system (e.g., through U.S. financial institutions, including U.S. branches of foreign banks) “touch” the United States and create a jurisdictional nexus to foreign parties, property, and events associated with those transactions.

U.S. enforcement actions against European banks in recent years illustrate some of the mechanics  and consequences of U.S. dollar and financial system-tied jurisdiction.[ii] Many of the transactions that led to U.S. sanctions liability involved U.S. dollar payments on behalf of foreign parties in relation to foreign business.

A key takeaway (or reminder) from the FIFA case for U.S. and foreign financial institutions is that physical borders are no barrier to U.S. legal jurisdiction where use of the U.S. financial system is concerned.  

To read more about U.S. financial system-tied jurisdiction over foreign banks in sanctions cases, read MassPoint’s 2015 update, Emerging Trade and Finance Channels Led by Non-Western States Could Curtail the Global Reach of U.S. Law.  For more discussion of the Foreign Corrupt Practices Act and its reach to foreign parties, transactions, and events, read MassPoint’s publication, Globalized Anti-Corruption Enforcement: Direct and Collateral Consequences for Private and State-Owned Firms.  Additional related publications are listed below.


RELATED PUBLICATIONS

Cross-Compliance for Financial Institutions: the Anti-Corruption-AML Nexus

Globalized Anti-Corruption Enforcement: Direct and Collateral Consequences for Private and U.S. Firms 

Rising Renminbi, Non-Dollar Trade May Stem the Extraterritorial Reach of U.S. Law

BNY to Pay $14.8 Million to Settle FCPA Corrupt Hiring Charges 

Proposed U.S. Rule Requires Banks to Collect Beneficial Ownership Information 


NOTES

[i] A distinction should be made between the bases for, and the effects of, U.S. jurisdiction. In the case of the kind of U.S. dollar and financial system-tied jurisdiction discussed here, the basis for U.S. jurisdiction is territorial—transactions processed through the United States financial system “enter” U.S. territory. The effects are extraterritorial, to the extent that parties, property, and/or events outside of the United States are affected or implicated.

[ii] Between 2009 and 2015, eight European banks—including HSBC, BNP Paribas, Standard Chartered, and Credit Suisse—were assessed combined penalties of over $14 billion for, among other offenses, violating  various U.S. sanctions programs, including against Cuba, Iran, Sudan, Libya, Myanmar and certain “blocked” parties associated with sanctioned countries, terrorism, weapons of mass destruction proliferation, and narcotics trafficking.