In a series of recent cases, the Supreme Court has vigorously applied the presumption against extraterritoriality to curtail the territorial reach of federal statutes. During the same period, however, federal prosecutors have brought an unprecedented wave of criminal cases against foreign banks for activities centered abroad, including benchmark manipulation, tax evasion, sanctions evasion, and money laundering. These prosecutions have led to some of the largest criminal fines ever levied and imposed costly compliance reforms affecting the defendants’ worldwide activities. This article first argues that, from a doctrinal standpoint, these two trends are on a collision course. Indeed, lower courts have begun to question the compatibility of expansive application of federal criminal law to foreign corporate defendants and their activities.

The article then examines whether financial criminal extraterritoriality should be curtailed, in light of the policies that motivate the presumption against extraterritoriality and corporate criminal prosecutions. It first shows that foreign bank prosecutions do not engage the separation of powers rationale relied on by the Court to the same degree as the private lawsuits considered in its recent cases. This is because criminal prosecutions are initiated by actors within the executive branch, which has primary responsibility for foreign relations. These actors have developed an informal decision-making process under which competing objectives — such as minimizing clashes with foreign governments and disruptions to financial stability — can be considered without compromising prosecutorial autonomy. From a broader policy standpoint, the article argues that in a world that lacks comprehensive international financial regulation, extraterritorial criminal prosecutions are an important tool for protecting U.S. interests. It concludes by suggesting reforms that would improve consistency and transparency in the Department of Justice’s decision-making process for such cases.

Pierre-Hugues Verdier, The New Financial Extraterritoriality, 87 George Washington Law Review, 239–314 (2019).