In a landmark decision with vast implications for foreign sovereigns and their instrumentalities and international organizations, the U.S. Supreme Court held on Wednesday that federal district courts have criminal jurisdiction over banks owned by foreign sovereigns, and the Foreign Sovereign Immunities Act of 1976 (FSIA) provides no protection in criminal cases.
Turkiye Halk Bankasi A.S. (Halkbank), a commercial bank majority owned by the Republic of Turkey, was indicted for allegedly participating in a conspiracy to launder billions of dollars’ worth of Iranian oil and natural gas proceeds to evade U.S. sanctions on Iran. The indictment alleges that some of the funds were laundered through the U.S. financial system, but Halkbank counters that these transactions occurred after the funds left the bank.
Halkbank moved to dismiss the indictment on the grounds that it was immune from criminal prosecution pursuant to the FSIA and the common law. The U.S. District Court for the Southern District of New York denied the motion to dismiss, and the U.S. Court of Appeals for the Second Circuit affirmed. The Second Circuit reasoned that 18 U.S.C. § 3231 broadly grants federal courts jurisdiction over “all offenses against the laws of the United States.” The Second Circuit did not decide whether the FSIA confers immunity from criminal prosecution, explaining that even if the FSIA confers immunity, Halkbank’s alleged conduct would fall under the FSIA’s exception to immunity for commercial activity.
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