Office of the Comptroller of the Currency (OCC)

As widely reported, the Spanish police raided last year the Madrid offices of the Chinese state-run Industrial and Commercial Bank of China (“ICBC”), the world’s biggest bank by assets. In the nearly 18 months following that raid and the numerous arrests made at that time, very little information about this money laundering investigation became known publically. That is, until Reuters recently published a lengthy article resulting from its review of “thousands of pages of confidential case submissions” and its “interviews with investigators and former ICBC employees.” The article raises numerous questions regarding the enforcement of European money laundering laws against Chinese banks operating abroad, as well as certain unique political and diplomatic considerations that may exist in those enforcement efforts. Below, we will compare these efforts with similar U.S. enforcement efforts, which are potentially gaining steam. Continue Reading High-Profile Spanish Money Laundering Investigation of Chinese Bank Raises Questions About Future of Similar U.S. Enforcement

The Supreme Court granted certiorari on April 3 to decide whether Jordan-based Arab Bank may be liable for claims including allegations that its New YorkDetail view of the United States Supreme Court branch processed transactions for known terrorists. While the central issue before the Court will be the scope of the Alien Tort Statute (“ATS”) – namely whether it permits corporate liability for violations of international law – Jesner v. Arab Bank also illustrates how alleged AML/BSA failures can lead to yet another avenue for secondary legal liability for financial institutions, as we previously have noted in other contexts. Depending on the outcome of the Court’s opinion in Jesner, such U.S. exposures may extend to foreign financial institutions even when the alleged conduct occurs primarily abroad. Continue Reading Weighing Corporate Liability under the Alien Tort Statute: What it Means for AML/CFT Controls

Employers increasingly face the difficult scenario of employees who misappropriate company data in the pursuit of whistleblower claims alleging misconduct by the employer. Such cases can present a complex mix of regulatory, cybersecurity, and employment issues. These issues were front and center in a recent whistleblower case pitting a bank against its former internal auditor, who engaged in computer-facilitated misappropriation of the bank’s confidential information allegedly to support whistleblower conduct.Whistle

The U.S. District Court for the Southern District of California recently declined to summarily adjudicate whether the employee’s confidentiality agreement precluded any whistleblower affirmative defense based on the employee’s alleged violation of computer fraud, contract, and tort laws. The whistleblower laws in question included the Bank Secrecy Act, Sarbanes-Oxley, Dodd-Frank, and the California Labor Code.

In Erhart v. Bofi Holding, plaintiff Charles Matthew Erhart filed a whistleblower complaint against his employer, Bank of the Internet (BofI), alleging BofI retaliated against him for reporting unlawful conduct to the government. BofI, in turn, filed a complaint, alleging that Erhart breached his employee confidentiality agreement by misappropriating confidential data relating to his employer and its clients and disseminating that data to the government, family members, and the national press.

Erhart illustrates the complex and practical problems faced by employers dealing with employees who engage in conduct that would otherwise constitute computer fraud, intellectual property theft, breaches of employment-related agreements and policies, and related tort claims under the mantle of “whistleblower.” A key issue in the case was whether Erhart would be entitled to pursue his retaliation claims before a jury or would be precluded from doing so as a matter of law given his computer-facilitated theft of confidential information. Continue Reading Bank Whistleblower Suits Highlight Limits of Employee Confidentiality Agreements