NDAA Enhances Foreign Bank Subpoena Power
NDAA Enhances Foreign Bank Subpoena Power: 31 USC (k)(3)(A): Recently, there has been much talk in the media about how the National Defense Authorization Act (NDAA) has expanded the ability of the US to obtain subpoenas for foreign institutions in order to expand AML enforcement rules (Anti-Money Laundering). The 2021 NDAA includes enhanced authority for the Treasury and Department of Justice on various fronts, including subpoena powers. In the realm of international tax, the key enhancement involved AML Section 6038 (5318)(k)(3)(A). Specifically, the code section (which falls under title 31 of the USC — Money and Finance), expands the government’s subpoena power.
*For reference, Title 31 is where you would also find FBAR (FinCEN Form 114) authority.
Expanded Foreign Bank Subpoena Power
Let’s take a look at how the anti-money laundering laws have been expanded when it comes to the subpoena power under 5318.
31 USC (k) Bank Records Related to Anti-Money Laundering Programs
Prior Code Section
(3) Foreign Bank Records —
(A) Summons or Subpoena of Records —
(i) In General –The Secretary of the Treasury or the Attorney General may issue a summons or subpoena to any foreign bank that maintains a correspondent account in the United States and request records related to such correspondent account, including records maintained outside of the United States relating to the deposit of funds into the foreign bank.
(ii) Service of Summons or Subpoena — A summons or subpoena referred to in clause (i) may be served on the foreign bank in the United States if the foreign bank has a representative in the United States, or in a foreign country pursuant to any mutual legal assistance treaty, multilateral agreement, or other request for international law enforcement assistance.
Update 5318 (k)(A)(3)
The code section is expanded to include the following:
“any records relating to the correspondent account or any account at the foreign bank, including records maintained outside the United States.”
What does this Mean?
This means the US Government has enhanced authority to obtain information to foreign account information. There are other enhancements as well, but in our neck of the woods (offshore compliance) this was the most important part of the amendments.
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