How US Authorities Obtain Foreign Evidence in Cross-Border Investigations

In summary

An insider’s perspective from former Department of Justice (DOJ) and Federal Bureau of Investigation staff about how the US government gathers evidence abroad. Without either the compulsory investigative tools available for domestic investigations or the lawful authorisation to conduct witness interviews or engage in other law enforcement activities abroad, the government has to turn to other methods.

Discussion Points

• Formal requests under bilateral and multilateral treaties
• Informal requests to foreign authorities with whom the US government has built relationships
• Incentives for cooperating companies and individuals
• Domestic evidence of foreign conduct
• Press reports and other public sources abroad

Referenced in this article

• US DOJ and its Office of International Affairs
• Securities and Exchange Commission
• Foreign Corrupt Practices Act (FCPA)
• Working Group on Bribery in International Business Transactions of the Organisation for Economic Co-operation and Development
• FCPA Corporate Enforcement Policy
• Anti-Money Laundering Act of 2020

Introduction

United States authorities – including primarily the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), with a growing cast of others – investigate and punish white-collar crime in the farthest corners of the world. Just in 2020 and 2021, Foreign Corrupt Practices Act (FCPA) resolutions and prosecutions, for example, involved conduct in Brazil,^[1] Venezuela,^[2] Ecuador,^[3] Mexico,^[4] Greece,^[5] Saudi Arabia,^[6] the United Arab Emirates,^[7] India,^[8] China,^[9] Malaysia^[10] and numerous other countries. So, too, do US authorities gather evidence from abroad in cases involving money laundering,^[11] export controls,^[12] sanctions,^[13] and numerous other potential criminal and regulatory violations.^[14]

Set aside, for the moment, the capacious jurisdictional reach the US agencies claim for themselves and focus on a more practical question: how do US authorities gather evidence of all that conduct that occurred far away (and often long ago)? For domestic investigations, US authorities have numerous compulsory powers and investigative tools at their disposal,^[15] as well as the legal authority to interview witnesses and conduct other law enforcement activities. Those powers, with the limited exceptions we discuss below, stop at the US borders.

To overcome that limitation in their efforts to gather evidence, US authorities rely on methods and sources that range from highly formal (and often bureaucratic and slow-moving) to the most informal, and include:

• formal requests for assistance from foreign law enforcement and regulatory agencies, most commonly through mutual legal assistance treaties (MLATs) for the DOJ and through international enforcement assistance for the SEC;^[16]
• the informal information sharing and investigation coordination that comes from the close working relationships that the DOJ, SEC and other agencies have built with their foreign counterparts, particularly during the past decade, and particularly under the auspices of the Working Group on Bribery in International Business Transactions of the Organisation for Economic Co-operation and Development (OECD), as well as from other public international organisations, such as multilateral development banks;^[17]
• information from cooperating companies, both those that voluntarily self-disclose potential misconduct and those the government approaches first;
• information from individuals, including cooperators and potential whistleblowers;
• evidence of foreign conduct that exists within the United States – such as bank records evincing foreign transactions, and email and phone exchanges with those abroad – that is subject to the US agencies’ formal, compulsory law enforcement powers; and
• information gleaned from foreign and domestic press reports and increasingly sophisticated analysis and mining of both public and non-public data and information.

In just the past year, the US Congress gave DOJ two new tools to gather foreign evidence: one is the power to subpoena foreign bank accounts and the other is the possibility of offering whistleblower awards in money laundering cases. Even more recently, President Biden has issued an executive memorandum directing a whole-of-government approach to investigating and combatting foreign bribery that may expand even further the government’s focus, reach and efficacy.^[18]

Below, we explore in detail each of these methods and the evidence that US agencies may gather using them, and give recent examples of how they have done so.

Formal requests

US authorities routinely obtain evidence from abroad through formal requests.^[19] DOJ’s formal request mechanisms include (1) treaty requests, (2) requests under executive agreements, and (3) letters rogatory.^[20] The SEC has similar mechanisms in place.^[21] The first two methods involve close cooperation, on the US side, between DOJ’s litigating components and its Office of International Affairs (OIA). OIA then transmits requests to its counterpart in the relevant foreign country, which then, in turn, often enlists litigating components in its government to fulfil requests. That process, at best, takes a matter of months and can routinely add years to an investigation.

Multiple types of treaties govern foreign evidence gathering. ‘Most treaty requests are made pursuant to a mutual legal assistance treaty’,^[22] which are bilateral treaties with the force of law. The United States has signed MLATs ‘with every European Union member state, many of the organization of American States member states’ and numerous other countries.^[23] In addition to MLATs, certain tax enforcement and extradition treaties contain evidence-related provisions.^[24] The United States is also party to corruption-specific multinational treaties such as the United Nations Convention Against Corruption (UNCAC)^[25] and the OECD Anti-Bribery Convention.^[26] Anecdotally, not all evidence obtained through MLAT requests is created equal. Although most authorities respond to requests in good faith, occasionally a foreign government will respond to an MLAT request in a less-than-helpful fashion. For example, during one FCPA investigation, a country responded to a formal MLAT request by delivering to one of the authors several burlap sacks filled with thousands of loose, untranslated, tobacco-stained pages that required many hours of work to become useful.

At the sub-treaty level, the United States has executive agreements with a number of countries that govern foreign evidence, most of which ‘apply to investigations arising from international narcotics trafficking’.^[27] The SEC for its part relies on less formal multilateral and bilateral memoranda of understanding (MOUs) to obtain evidence from foreign sources. The SEC and more than 100 other securities regulators across the world are signatories to the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding on information-sharing among securities regulators.^[28] The SEC also has bilateral cooperation agreements with a number of other countries, including France, Germany, Hong Kong, Switzerland, Singapore and the United Kingdom.^[29]

In the absence of a treaty, executive agreement or MOU, letters rogatory are the customary method of obtaining evidence from abroad.^[30] A letter rogatory is a request from a judge in the United States to the judiciary of a foreign country to perform an act that would otherwise constitute a violation of that country’s sovereignty.^[31] Letters rogatory are customarily transmitted via a diplomatic channel – a time-consuming process that can take a year or more.

Formal evidence requests afford US authorities two advantages that make them worthwhile, and often necessary. First, the certifications that accompany evidence obtained through formal requests may be necessary to admit the evidence at trial.^[32] Second, transmitting MLAT requests allows DOJ to toll the statute of limitations for the crimes it is investigating until the request is fulfilled.^[33]

Gathering evidence from abroad through formal requests is a slow process and, consequently, US authorities often focus on other methods during the investigatory stage of an enforcement action. In addition, the pursuit of evidence solely through formal requests has other disadvantages. For example, a money trail that extends through multiple countries requires multiple, time-consuming seriatim MLAT requests, which can quickly exceed a crime’s state of limitations to fulfil.

Informal relationships

During the past decade, the number of US law enforcement personnel (DOJ prosecutors, SEC attorneys and accountants, and federal agents from a number of law enforcement agencies) focused on cross-border issues has increased substantially.^[34] Conversely, many countries have passed their own versions of foreign bribery laws and have begun investing in the personnel, resources and expertise to give them meaningful enforcement teeth.

In that span, US authorities have built close, productive relationships with many of their foreign counterparts. The fruits of those relationships – eye-poppingly large, multi-country resolutions – feature prominently in the business sections of leading news sources.^[35]

These relationships have led to robust information sharing and investigation coordination that both extend the United States’s ability to gather evidence in the farthest corners of the world and multiply its forces. Foreign law enforcers can use any of the domestic tools available to them in their home country (witness interviews, subpoenas, search warrants, and so on) and share those fruits with the United States.^[36] On its side, the United States can do the same, though DOJ has to seek a court order before sharing any grand jury information with foreign authorities (or even domestic authorities such as the SEC).

Many of these relationships began in the regular law enforcement meetings held by the OECD, the Asia-Pacific Economic Cooperation and other international organisations.^[37] Others – such as the highly productive relationship with Brazilian authorities – have been forged in the trenches of investigations into Petrobras, Odebrecht, Embraer and others.

Still others have grown from relationships the US investigative agencies have themselves. For example, the US Internal Revenue Service is a member of the Joint Chiefs of Global Tax Enforcement (known as the J5), which according to its mission statement, ‘is committed to combatting transnational tax crime through increased enforcement collaboration’.^[38] The US Immigration and Customs Enforcement’s El Dorado Task Force, established in 1992, is focused on financial crimes – particularly money-laundering – and consists of more than 200 domestic and international members.^[39] El Dorado has a long track record of success in international money laundering investigations.^[40] The SEC joined IOSCO in 2002, under a multilateral memorandum of understanding (MMOU) with more than 100 securities and derivatives regulators.^[41] ‘Pursuant to the MMOU, signatories agree, among other items, to provide each other with certain critical information, to permit use of that information in civil or administrative proceedings and for onward sharing with self-regulatory organizations and criminal authorities.’^[42] These organisations, often created through less-formal MMOUs such as the IOSCO, place law enforcement personnel in direct contact with one another.

Presently, the Federal Bureau of Investigation (FBI) maintains 63 legal attaché offices. Of those, 17 are new additions since 2004. During the same period, the FBI also added more than two dozen sub offices in key cities providing coverage for more than 180 countries, territories, and islands.^[43] Each office operates through mutual agreement with the host nation and works to assist US authorities in coordinating investigations with the host nation. Similarly, the Drug Enforcement Agency (DEA) operates 91 foreign offices in 68 countries.^[44]

In 2005, the then FBI Director Robert S Mueller, III summed up the reason for building such an international presence:

Today, an organized crime enterprise based in Budapest could launder money through banks in Switzerland and communicate with operatives in Slovakia or Singapore. A terrorist cell based in the Middle East could plan in Europe, finance operations in North America, and carry out an attack anywhere in the world. And a single computer programmer in the Philippines could launch a cyber-attack that paralyzes information networks throughout the world, causing billions of dollars in economic damage.^[45]

That international expansion comes with a white-collar focus. In 2020, the FBI disseminated guidance to its investigators that concluded ‘with high confidence’ that money launderers will continue to use hedge funds and private equity funds to evade detection by anti-money laundering programmes.^[46] Examples contained in the training material included a Mexican drug cartel opening a hedge fund in Los Angeles, a United Kingdom-based hedge fund using private placement funds to purchase prohibited items from sanctioned countries, and a New York-based private equity firm that received more than US$100 million from Russian organised crime figures.

The FBI, DEA, Bureau of Alcohol, Tobacco, Firearms and Explosives and other agencies proactively search for money launderers in the act. This is precisely why, in 2007, American Express Bank International forfeited US$55 million for its participation in the Black Market Peso Exchange, 47 why in 2009 Credit Suisse was fined US$536 million for violating trade sanctions with Iran,48 and why in 2010 Deutsche Bank was fined US$553 million for providing illegal tax shelters.49 Each of the named entities was caught in proactive under-cover money laundering stings by agents pursuing ‘flight capital’ in coordination with other agencies from various parts of the world.50

This focus on international relationships recently found full expression in Operation Trojan Shield, the product of initial collaboration between the FBI and the Australian Federal Police (AFP).^[51] Together, agents from the FBI and AFP developed an encrypted messaging app with which they enlisted cooperating witnesses to market to various criminal enterprises. The operation resulted in thousands of hours of recorded conversations among, and between, some of the world’s most notorious criminals. The ensuing arrests – more than 500 globally – largely occurred simultaneously in a multitude of jurisdictions around the world.

Cooperating companies

Cooperating companies are perhaps the US authorities’ most straightforward and often largest source of foreign evidence. Companies – particularly publicly traded companies – often cooperate with US authorities’ investigations. Although some companies in highly regulated industries may be required to do so, the majority are not. Still, US authorities (especially DOJ) have worked to create incentives for companies both to cooperate with their investigations and even to self-disclose potential misconduct voluntarily.

The most prominent programme is the DOJ Criminal Division’s FCPA Corporate Enforcement Policy (CEP).^[52] It delineates benefits that a company under investigation for FCPA violations can obtain if it:

• voluntarily self-discloses misconduct prior to an imminent threat of disclosure or government investigation and reasonably promptly after becoming aware of the offence;
• provides full and proactive cooperation, including, as is particularly relevant for this article, (1) the disclosure of overseas documents, (2) producing overseas witnesses over whom the company has authority, and (3) providing translations of relevant documents in foreign languages; and
• fully remediates the misconduct, including through improving its compliance programme and disciplining culpable individuals.

The CEP’s benefits are substantial. A company that meets all three criteria – voluntary self-disclosure, full cooperation and full remediation – enjoys a presumption that it will obtain a declination from DOJ, even if the investigation yields evidence of criminal conduct. And even when aggravating circumstances prevent a declination – as when a company is a recidivist or the criminal conduct is too egregious, too pervasive, too profitable or at too high a level within the company – a company will still get a 50 per cent reduction off the low end of the applicable guideline range and will generally not receive a monitor. For a company that did not voluntarily self-disclose misconduct but still fully cooperated with a DOJ investigation and fully remediated, the CEP calls for a 25 per cent reduction off the low end of the applicable sentencing guideline range.

The incentives set out in the CEP have been successful, both in inducing more companies to disclose potential misconduct voluntarily,^[53] and in encouraging companies, whether they voluntarily self-disclosed or not, to cooperate fully with DOJ.

Encouraged by the success the Criminal Division has had with the CEP, other DOJ components and enforcement agencies have fashioned similar policies. In December 2019, the DOJ’s National Security Division adopted the same standards as the CEP under its Export Control and Sanctions Enforcement Policy for Business Organizations.^[54] Similarly, the self-disclosure policy promulgated by the Department of the Treasury’s Office of Foreign Assets Control tracks the CEP.^[55] The Commodities Futures Trading Commission (CFTC) also promulgated its own policy in 2017.^[56] Like the CEP, the CFTC enforcement advisory requires full disclosure of all relevant facts for a company to obtain cooperation credit.

Cooperating individuals

Individuals living abroad (whether US or foreign nationals) often find it in their interest to cooperate in a US investigation, even when the US authorities cannot legally compel them to do so. Their incentives vary widely: some seek a whistleblower payout, others want to keep their jobs, and some are working to lighten criminal or civil punishments they face here or abroad.

US authorities seek, in the first instance, to have foreign individuals travel here for interviews. If they cannot do so, they must seek approval from a foreign country – usually, although not always, through a formal MLAT – to conduct an interview there. In some countries, foreign law enforcement may insist either on joining an interview or even conducting it itself, which can, depending on the local laws, create potential taint problems if they compel testimony.^[57]

The SEC’s whistleblower programme is perhaps the US government’s most potent tool to attract cooperating witnesses with knowledge of criminal violations. In 2010, the Dodd-Frank Act authorised the SEC and CFTC to pay whistleblowers between 10 per cent and 30 per cent of monetary sanctions over US$1 million that resulted from information provided in tips.^[58] Since that time, the SEC has awarded more than US$900 million to whistleblowers, resulting in US$3.5 billion in financial penalties.^[59] The programme is designed to elicit information that the SEC may not have otherwise discovered – a carrot more enticing than the stick of retaliation whistleblowers fear.

In January 2021, Congress armed DOJ and the Treasury with their own whistleblower programme, one aimed at combatting money laundering by offering rewards to individuals who voluntarily provide original information to DOJ or Treasury about possible violations of the Bank Secrecy Act. As with the SEC programme, tipsters may receive up to 30 per cent of the monetary penalties the authorities collect. That reward programme (for which the Treasury has delegated responsibility to the Financial Crimes Enforcement Network), once it is up and running, may prove as fruitful as the SEC programme has been in gathering foreign evidence. That is particularly true because the money laundering focus of the programme dovetails well with the FBI’s and DEA’s long history and deep expertise of focusing on foreign money laundering activity.

Domestic evidence of foreign conduct

In addition to information gathered from foreign jurisdictions, US authorities can obtain substantial evidence of foreign misconduct through their ordinary domestic evidence gathering. The United States occupies a privileged position with respect to the two main sources of evidence on cross-border crime: digital records and banking information. The popularity of US-based technology and social media platforms (Facebook, Gmail and the like) and the global ubiquity of dollar-denominated transactions ensures that evidence concerning potential misconduct abroad is often stored in or transits through the United States. US authorities uses subpoenas and search warrants to seize everything from personal email accounts and social media data to transaction records.

Domestic evidence gathering could become less useful if bad actors are careful to avoid any nexus with the United States. Congress, however, has attempted to mitigate this issue through a new statutory provision that greatly expands US authorities’ ability to obtain financial information from foreign banks.

The Anti-Money Laundering Act of 2020 (AMLA), passed as part of the 2021 National Defense Authorization Act (NDAA), greatly expands the subpoena power of US authorities with respect to foreign bank accounts. It authorises the DOJ and Treasury Department to ‘issue a subpoena to any foreign bank that maintains a correspondent bank account in the United States and request any records relating to the correspondent bank account or any account at the foreign bank, including records maintained outside the United States’ that are the subject of an investigation of any criminal law of the United States, civil forfeiture actions, and anti-money laundering investigations.^[60] Given that a substantial swathe of foreign banks have established US correspondent accounts, the AMLA may give DOJ the functional ability to compel production of bank records from every corner of the world.

Prior to the AMLA’s enactment, US authorities could subpoena correspondent bank accounts, which are limited in their utility, but had no ability to obtain information from foreign bank accounts without the assistance of a foreign government, either through formal or informal means, or, sometimes, cooperating companies.^[61] Now US authorities can subpoena information on any account at the foreign bank, irrespective of that account’s connection with the correspondent bank account, so long as the foreign bank maintains a correspondent relationship with a US bank. These correspondent banking relationships are a key component of the international banking system,^[62] which means most large international financial institutions maintain such a relationship with a US bank.

The new provisions of the NDAA also contain an enforcement mechanism. Failure to comply with a subpoena can result in contempt proceedings,^[63] substantial fines^[64] and an order to US financial institutions to terminate their correspondent relationships with the foreign bank. Failure to terminate those relationships can result in substantial fines levied against the domestic bank.^[65] These enforcement provisions are essential to the operation of the law because it puts pressure on US banks to ensure compliance with subpoenas by their foreign partners.

Public sources

In addition to formal evidence gathering, US authorities may rely on press reports and other publicly available information, either as substantive proof of misconduct or as a starting point for further investigation. Bribery scandals that at first appear to be small or limited to a particular country can spiral into major multinational investigations. For instance, Operation Car Wash began as a minor investigation into misconduct by executives at Petrobras and sparked arguably the largest and widest-ranging anti-corruption and money-laundering investigations in history; it now spans more than a dozen countries.^[66] To this day the DOJ is pursuing cases stemming from that initial investigation in Brazil.^[67] Because it is difficult to tell where bribery allegations may lead, public source material in foreign countries can be useful in pointing US authorities towards potential violations of US law.

Conclusion

US authorities have an extensive toolkit to gather evidence from abroad. If US agencies believe there is relevant evidence located overseas, they will use each and every tool in that kit to build their cases. Moreover, as the expansion of subpoena power under the NDAA demonstrates, Congress has expanded the jurisdictional reach of ‘domestic’ evidence gathering by US authorities to ensure the robust enforcement of US law. US authorities have a long arm when it comes to gathering evidence from abroad and there is no sign that Congress, the courts or the executive branch intends to curtail that reach any time soon.

Notes