Judge upholds subpoenas to three Chinese banks

WASHINGTON >> A federal judge has ordered three Chinese banks partly or wholly owned by the Beijing government to turn over documents in a U.S. criminal investigation into how a Hong Kong corporation allegedly helped North Korea’s regime evade sanctions, new court filings show.

A March 18 opinion unsealed late Tuesday by Chief U.S. District Judge Beryl Howell marked the first known instance in which a U.S. court has upheld subpoenas to a Chinese bank in a sanctions probe.

The banks had argued that if it complied, it would violate laws in its country and be exposed to fines and legal penalties from its own government.

“Allowing China to gum up United States’ investigations by dictating how the United States can pursue evidence, especially when the two countries’ interests are not aligned, is antithetical to sound law enforcement,” Howell wrote.

In a sweeping and bluntly worded 59-page opinion, Howell found that the USA Patriot Act, adopted after the 9/11 attacks, authorized law enforcement to demand records tracing the source of foreign bank deposits funneled to accounts at U.S. banks set up to handle cross-border transactions, even if the records have no other tie to the United States or outside the country.

Records capturing “cash deposits ... intrabank transfers and foreign currency deposits” that can be used to launder money through the United States “are precisely the type that the statute permits the government to subpoena,” wrote Howell, who helped draft the Patriot Act as Senate Judiciary Committee counsel before her appointment as a federal judge in 2010.