Financing Cr-ISIS: The Efficacy of Mutual Legal Assistance Treaties in the Context of Money Laundering and Terror Finance.

Author:Wright, Michaelene K.
Position:Islamic State

TABLE OF CONTENTS I. INTRODUCTION 230 II. BACKGROUND 233 A. Historical Development of MLA Mechanisms 234 B. The Development of Modern MLA Programs 235 C. Operationalizing MLA Treaties 237 D. Challenges of the Modern MLA Regime 239 1. Structural Deficiencies 240 2. Operational Deficiencies 241 E. MLA in the Context of International Financial Crime and Terrorism 244 III. ANALYSIS 246 A. Potential for Extraterritorial Action and Action Outside MLA 247 1. Correspondent Banking Relationships and the Global Financial System 247 2. Action Based on Domestic Law 249 3. Asset Forfeiture Actions 252 B. Conflict Among and Within Enforcement Bodies. 254 IV. SOLUTION 256 A. Impracticability of Eradication and Replacement 256 B. Requirements for Successful Reform 258 C. International Implications of Reform 260 V. CONCLUSION 262 I. INTRODUCTION

In December 2016, the U.S. Department of Justice (DOJ) filed a complaint seeking the forfeiture of assets linked to the Islamic State (ISIS). (1) Unlike a traditional criminal prosecution, however, the four defendants in this complaint are property, rather than people. (2) This civil forfeiture action seeks to circumvent the traditional criminal justice system in an effort to disrupt terrorist funding networks without pursuing criminal charges against any specific individual, but instead seeking to seize assets which have themselves been linked to criminal activity. (3) The assets, a group of Roman antiquities dating back to as early as 330 BC, were allegedly trafficked by ISIS in an effort to finance its regime through a series of taxes. (4) One year after the initial complaint was filed, the DOJ filed an amended complaint, adding additional antiquities and, more notably, sought an arrest warrant in rem for the very first named property--a gold ring with a dark green gemstone, carved with a depiction of the Roman goddess, Tyche. (5)

However, this case is not as simple as other civil forfeiture actions--none of the items sought are known to be located within the territorial bounds of the United States. (6) Therefore, in order to retrieve the antiquities and achieve the objective of disrupting one of ISIS's sources of funding, the DOJ is left to rely on international frameworks for cooperation between law enforcement entities. In this case, the DOJ aims to send the arrest warrant in rem as part of a mutual legal assistance (MLA) request to Turkey--the ring's last known location. (7) Unfortunately, as this Note will discuss, the MLA process is fraught with inefficiencies, particularly in the context of counterterrorism and international financial crime.

An inevitable result of the increase in globalization and the simplicity of transmitting money and data across hemispheres in seconds has been a corresponding increase in international crime. This type of crime is particularly pervasive in the financial sector and opens up avenues through which to establish funding networks for terrorist and criminal organizations. Unfortunately, because of the transient nature of the evidence of this sort of criminal activity, successful investigation and prosecution of this conduct by domestic law enforcement is incredibly difficult. Domestic law enforcement entities are increasingly reliant on MLA mechanisms to glean information from their foreign counterparts necessary to develop their investigations, particularly those involving international crime. (8) These legal mechanisms on which the United States and much of the rest of the world rely are well intended but are unequipped to deal with the mass amounts of data incident to these types of global investigations.

In order to effectively combat transnational crime, the international community must devise a cohesive, uniform vehicle through which law enforcement bodies across the globe can exchange information with one another and build investigations that cross borders rather than cease at them. It also necessitates increased utilization and cooperation with international law enforcement and financial regulatory bodies; these bodies may operate both as central information hubs and as potential mediators of international disputes over data sharing and extraterritorial action. The current mechanisms through which law enforcement agencies communicate with their foreign counterparts are outlined, for the most part, in bilateral or multilateral "mutual legal assistance treaties" (MLATs). (9) The United States maintains these agreements with more than sixty countries, while the United Kingdom (UK) has signed fewer than twenty in addition to a broad agreement among the nations of the European Union (EU). (10) Additionally, many areas of the world have developed regional schemes for mutual assistance based on geographic and cultural proximity. (11) However, as this Note will discuss, the current mutual legal assistance regime on the whole is not without its problems.

Part II of this Note begins with a discussion of the background of MLA, (12) and of the general global trend toward international cooperation and away from national isolationism. (13) While many countries do buy into the current MLA system, some nations and regions still steadfastly refuse to share information between law enforcement agencies, or are party to MLA agreements but fail to make use of them. (14) This hesitance may be due to political or geographical isolation, or concerns about implicating a nation's own citizens in international criminal investigations.

(15) This Part also discusses the historical use of the MLA regime specifically in the context of investigating transnational crime and organizations that finance terrorism. Finally, it lays out the most common problems that come hand in hand with the system as it currently exists, such as lack of efficiency, uniformity, and resources with which to fulfill requests.

In Part III, the Note delves into potential avenues for investigative action and data acquisition outside the MLA process. Many of these avenues have historically been used by law enforcement agencies and pose their own unique set of enforcement and political difficulties. The United States has also developed investigative and enforcement tools which give it greater latitude in effecting domestic judgments against foreign actors, which have impacted and incensed both the international law enforcement community and the global financial community. These tools include the use of domestic laws, like the Stored Communications Act (SCA) and asset forfeiture, in addition to international financial regulations. Part III also discusses conflict among and within enforcement bodies engaged in the MLA system and the public and private implications of the current system, particularly when it comes to the variation in international data privacy protections.

Finally, Part IV begins by detailing the impracticability of solutions that propose to eliminate the current MLA regime, and the reasons to favor reform as an alternative. The Note specifies the potential elements of reform necessary to combat the problems currently faced by law enforcement and international governments. Finally, Part IV concludes with an explanation of the problems inherent in the system that are unable to be solved by reform, and the potential implications of reform for those issues.


    In order to understand the current mutual legal assistance system that governs communication and assistance between national law enforcement bodies, this Note will first lay out a brief background on how the system came to exist. MLA as a general concept developed concurrently with shifting notions toward the acceptability and utility of bodies of international law and international cooperation. As globalization and technological development throughout the twentieth century necessitated more sophisticated channels of communication between foreign governments, international bodies began testing out different methods of implementation of MLA that were consistent with both domestic laws and the overall goals of the program. (16)

    1. Historical Development of MLA Mechanisms

      At the time of the nation's inception, American institutions flatly refused to provide assistance to foreign jurisdictions in criminal cases and investigations. (17) This refusal was based on the grounds that providing such assistance would create a conflict of laws. (18) Specifically, the United States did not believe in giving domestic effect to foreign criminal prohibitions, particularly when the conduct being investigated by the foreign entity would not result in criminal liability in the United States. (19) Additionally, the common law tradition in the United States and the UK was seen as incompatible with taking evidence abroad, given the potential conflict with the Confrontation Clause and the inability to adequately assess the reliability of the evidence at trial. (20) Subsequent legislation in the United States in the mid-1800s regarding judicial assistance to foreign nations held fast to this justification while still managing to increase flexibility, choosing to restrict assistance to certain types of testimony and certain civil suits. (21)

      Since the end of World War II, increased globalization has forced foreign and domestic judicial bodies to develop new methods through which to seek and receive assistance from other jurisdictions in gathering evidence and building cases on criminal matters. (22) This concept is generally referred to as mutual legal assistance. (23) During this time period, restrictions on the provision of assistance to foreign courts were loosened, and governments generally began to be more amenable to providing international legal assistance in both civil and criminal cases. (24) At this time, the United States provided assistance in foreign investigations through the judicial branch and tended to rely on the issuance and receipt of letters rogatory between judicial bodies in order to facilitate the exchange...

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