Tuesday, June 3, 2008

Santos and International Law

Yesterday, the Supreme Court of the United States decided United States v. Santos (No. 06-1005). (Opinions here.) The case turned on the interpretation of the word "proceeds" in the federal money-laundering statute, 18 U.S.C. 1956(a)(1). There was no opinion of the court. Justice Scalia, with Justices Souter, Thomas (except for one part of the opinion not relevant to the discussion below), and Ginsburg concurring, concluded that "proceeds" means "profits" and not "receipts." Justice Stevens, writing for himself, agreed with Justice Scalia's conclusion but only in the context of the circumstances of this case, gambling businesses. Justice Alito filed a dissenting opinion, in which Chief Justice Roberts and Justices Kennedy and Breyer concurred. Justice Breyer also filed a dissent. The dissenters would have interpreted "proceeds" as "receipts."

The United States (like many other countries) has assumed a variety of international obligations in the area of international law enforcement. Primary among these is the obligation to criminalize certain acts, as defined in a number of treaties - the United Nations Convention Against Corruption, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the United Nations Convention Against Transnational Organized Crime, the Council of Europe Convention on Cybercrime, and a wide variety of counternarcotics and terrorism conventions, just to name a few. Money laundering is one of those acts that the United States has agreed to criminalize under the Corruption, Transnational Organized Crime, and Antibribery conventions, among others.

One would think that the United States's international obligations would be relevant to the interpretation of the federal money-laundering statute at issue in Santos, and, to his credit, Justice Alito, in his dissent, put those obligations front and center. He wrote:

The leading treaty on international money laundering, the United Nations Convention Against Transnational Organized Crime (Convention), Nov. 15, 2000, 2225 U.N.T.S. 209 (Treaty No. I-39574), which has been adopted by the United States and 146 other countries,[FN2] is instructive. This treaty contains a provision that is very similar to § 1956(a)(1)(B)(i). Article 6.1 of the Convention obligates signatory nations to criminalize “[t]he . . . transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action.” Id., at 277 (emphasis added). The Convention defines the term “proceeds” to mean “any property derived from or obtained, directly or indirectly, through the commission of an offence.” Id., at 275 (Art. 2(e)). The money laundering provision of the Convention thus covers gross receipts.[FN3]

[FN2.] See Multilateral Treaties Deposited with the Secretary-General, pt. I, ch. XVIII, No. 12, United Nations Convention against Transnational Crime (Nov. 15, 2007), online at http://untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterXVIII/treaty13.asp (all Internet materials as visited May 29, 2008, and available in Clerk of Court's case file).

[FN3.] If 18 U.S.C. § 1956 were limited to profits, it would be narrower than the obligation that the United States undertook in Article 6.1 of the Convention, but the Department of State has taken the position that no new legislation is needed to bring the United States into compliance. See Hearing on Law Enforcement Treaties before the Senate Committee on Foreign Relations, 108th Cong., 2d Sess., 10 (2004) (statement of Samuel M. Witten, Deputy Legal Adviser (“[W]e can comply with the Convention's criminalization obligations without the need for new legislation”)).

Justice Scalia, writing for the plurality, disagreed with the claim that the Transnational Organized Crime Convention was relevant to the interpretation of the statute:

Justice ALITO's dissent (the principal dissent) makes much of the fact that 14 States that use and define the word “proceeds” in their money-laundering statutes, the Model Money Laundering Act, and an international treaty on the subject, all define the term to include gross receipts. See post, at 3-5. We do not think this evidence shows that the drafters of the federal money-laundering statute used “proceeds” as a term of art for “receipts.”
It is unfortunate, to say the least, that a majority of justices on the Supreme Court so cavalierly dismissed U.S. international obligations, particularly in this area. Though Justice Alito fails to say so explicitly (he only hints at this in his footnote 3), the Court's interpretation of the statute, even if limited in the way Justice Stevens suggests, arguably puts the United States in breach, at least, of both the Transnational Organized Crime Convention and the Corruption Convention (which has a money-laundering provision modeled on the TOC Convention). This is ironic since the United States has promoted these criminalization provisions (including money laundering) as a key component of an international law enforcement strategy going back many years now. (It is no mistake that the TOC provision on money laundering is quite similar to the provision in the U.S. code.) The Court's decision is reminiscent of its equally casual and unfortunate dismissal of U.S. international obligations in the context of counternarcotics in Gonzales v. O Centro Espírita Beneficente União do Vegetal (decided February 21, 2006). In both these cases, the Court has significantly undermined U.S standing in international law enforcement and consequently the United States's ability to achieve transnational cooperation and results in this crucial area.