31 Jul 2019
A U.S. appeals court on Tuesday ordered heavy contempt fines to begin against three large Chinese banks locked in a battle over customer financial records with U.S. prosecutors investigating possible North Korean sanctions violations.
It remained unclear whether the firms, unnamed in court papers but previously reported to be the Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank, will comply with the U.S. subpoenas, the first upheld by a U.S. appeals court in a criminal sanctions probe involving Chinese banks.
In a unanimous ruling, a U.S. Court of Appeals for the D.C. Circuit panel rejected the banks’ arguments in written pleadings 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 pact between the two countries.
The three-judge panel upheld a lower court’s contempt finding. The initial finding, issued April 10, imposed $50,000-a-day fines on each bank beginning seven business days after an appellate decision, or Aug. 8. The contempt order also allows for one of the banks—which is refusing a request under a provision of the USA Patriot Act—to be cut off from the U.S. banking system if that penalty is ordered by the U.S. attorney general or treasury secretary.
The District Court’s contempt orders against all three Banks appealed from in these causes is hereby affirmed, for the reasons in the accompanying opinion, the appeals court said.
The 44-page opinion by U.S. appellate Judges David S. Tatel, Patricia A. Millett and Cornelia T.L. Pillard, written for the court by Tatel, remains under seal pending redactions proposed by each side.
Lawyers for the three banks did not respond to requests for comment or declined to comment, as did a spokeswoman for the U.S. attorney’s office of the District, whose national security section is handling the case.
By Spencer S. Hsu, The Washington Post, 30 July 2019
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