United States District Court, District of Columbia
AMENDED MEMORANDUM OPINION
E. BOASBERG United States District Judge.
Ramon and Higini Cierco, along with two associated
corporations, are the majority shareholders of a privately
held Andorran Bank, Banca Privada d’Andorra S.A. (BPA),
which has recently found itself in a bit of a pickle. An arm
of the U.S. Treasury Department, the Financial Crimes
Enforcement Network (FinCEN), developed concerns that BPA was
facilitating - or was willfully blind to - various
money-laundering transactions happening under its roof.
Relying on authority provided by the 2001 USA PATRIOT Act,
FinCEN in early 2015 started a process that, had it been
completed, would have effectively required all U.S. banks to
stop transacting with BPA. In pursuit of this goal, FinCEN
published both a Notice of Finding and a Notice of Proposed
Rulemaking in the Federal Register, stating its reasons for
suspecting that BPA was of “primary money laundering
concern” and proposing regulations that would limit
U.S. banks’ involvement with the accused.
FinCEN promulgated a final rule, however, Plaintiffs sued in
this Court in October 2015, seeking to vacate those Notices
and enjoin Treasury from proceeding any further. Plaintiffs
believe that FinCEN’s actions set into motion a chain
of events that will (soon and irrevocably) lead to
BPA’s demise. In particular, after the Notices issued,
U.S. banks voluntarily ceased U.S. dollar transactions with
BPA. Even worse, the Andorran government took control of BPA
and has recently developed plans for its liquidation. Given
this turn of events, FinCEN recently changed course,
withdrawing its Notice of Finding and NPRM in early 2016
because it believes that BPA, on account of its Andorran
receivership, is no longer of “primary money laundering
concern.” Pointing to those withdrawals, the government
has now moved to dismiss, arguing that any controversy that
once existed between the parties has been rendered moot. The
Court agrees and will grant Defendants’ Motion.
at least with the enactment of the Bank Secrecy Act in 1970,
Pub. L. 91-508, Tit. II, 84 Stat. 1118, Congress has given
the Secretary of the Treasury authority to impose various
regulations on domestic banks to reduce the “use of
banks and other institutions as financial intermediaries by
persons engaged in criminal activity.” Ratzlaf v.
United States, 510 U.S. 135, 138 (1994). Following the
terrorist attacks on September 11, 2011, Congress amended the
Act in Title III of the 2001 USA PATRIOT Act, Pub. L. 107-56,
115 Stat. 272, in an effort to “prevent, detect, and
prosecute international money laundering and the financing of
terrorism.” Id. § 302(b)(1). Relevant
here, § 311 of the PATRIOT Act, codified at 31 U.S.C.
§ 5318A, gave the government authority to impose any of
five “special measures” on domestic
financial institutions, provided the Secretary “finds
that reasonable grounds exist for concluding” that a
foreign bank - i.e., one “operating
outside the United States” - is “of primary money
laundering concern.” 31 U.S.C. § 5318A(a)(1).
first four of the “special measure[s]” allow the
Secretary, by way of FinCEN, to require domestic banks to
keep records and report on specific types of transactions.
Id. § 5318A(b); see also § 310
(establishing FinCEN as a “a bureau in the Department
of the Treasury” and enumerating its authorities).
Those measures, which are not at issue here, may be imposed
by Treasury “by regulation, order, or otherwise as
permitted by law.” § 5318A(a)(2)(B).
fifth special measure, in contrast - which is the one FinCEN
believed was warranted for BPA - represents a more severe
imposition on domestic banks. If the Secretary finds a
foreign banking institution to be “of primary money
laundering concern, ” he may, “in consultation
with the Secretary of State, the Attorney General, and the
Chairman of the Board of Governors of the Federal Reserve
System, . . . prohibit, or impose conditions upon, the
opening or maintaining in the United States of a
correspondent account or payable-through account by any
domestic financial institution or domestic financial agency
for or on behalf of a foreign banking institution.”
Id. § 5318A(b)(5). Unlike the other four
measures, which may be imposed “as permitted by law,
” this measure “may be imposed only by
regulation.” § 5318A(a)(2)(B), (C); see 5
U.S.C. § 553 (describing procedures for agency
Factual and Procedural Background
The Two Notices
March 2015, FinCEN publicly announced that it had
“found that reasonable grounds exist for concluding
that [BPA] is a financial institution operating outside of
the United States of primary money laundering concern.”
Notice of Finding That Banca Privada d’Andorra Is a
Financial Institution of Primary Money Laundering
Concern (“Notice of Finding”), 80 Fed. Reg.
13464, 13464 (March 13, 2015). Basing this assessment on
various factors, it concluded that: (a) “[s]everal of
BPA’s high-level management have facilitated financial
transactions on behalf of TPMLs [third-party money
launderers]”; and (b) BPA has weak
and “allow[s] its customers to conduct transactions
through the U.S. financial system that disguise the origin
and ownership of the funds.” Id. at 13465-66.
FinCEN acknowledged that while BPA may offer services for
some “legitimate business purposes, ”
distinguishing between legitimate and illegitimate services
was “difficult to assess on the information available .
. . .” Id. at 13466. On the basis of these
findings, FinCEN concluded that imposition of the fifth
special measure under § 311 was appropriate, suggesting
that doing so
would guard against  international money laundering and
other financial crimes described above directly by
restricting the ability of BPA to access the U.S. financial
system to process transactions, and indirectly by public
notification to the international financial community of the
risks posed by dealing with BPA and TPMLs.
Id. at 13466.
same day it published its Notice of Finding, FinCEN also
published in the Federal Register a Notice of Proposed
Rulemaking “to propose the imposition of [the fifth]
special measure against BPA.” Imposition of Special
Measure against Banca Privada d’Andorra as a Financial
Institution of Primary Money Laundering Concern (NPRM),
80 Fed. Reg. 13304, 13304 (March 13, 2015). In addition to
setting forth what the rule would require from U.S. financial
institutions and justifying Treasury’s use of the fifth
special measure, the government also observed that
“[o]ther countries or multilateral groups have not yet
taken action similar to the action proposed in this
rulemaking, ” - i.e., blocking the domestic
use of correspondent bank accounts maintained for BPA and
screening out BPA-related transactions. Id. at
13305. It therefore “encourage[d] other countries to
take similar action based on the information contained in
this NPRM and the Notice of Finding.” Id. It
also informed the public that the deadline for submitting any
comments regarding the NPRM was May 12, 2015. Id. at
took advantage of the public-comment period, filing on May 6,
2015, a comment that “described (1) numerous steps the
Bank had taken for years prior to FinCEN’s Notice to
evaluate its AML and compliance program, (2) the results of
those evaluations, and (3) evidence showing the Andorran
government’s certification of BPA’s AML
program.” Complaint, ¶ 66. The comment did not
specifically respond to FinCEN’s allegations contained
in the Notice of Finding because, according to Plaintiffs,
“[t]he characteristic lack of specificity in the NOF
made it impossible” to do so. Id. ¶ 70.
Plaintiffs also wrote letters to FinCEN before the comment
period closed, asking for it to “provide additional
specificity or a complete file of unclassified underlying
documents that served as the evidentiary basis for the
charges, in order to afford Plaintiffs the opportunity to
provide a comprehensive response before the closure of the
Notice and Comment period on May 6, 2015.”
Id., ¶ 71. FinCEN, however, never responded.
their ongoing attempts to change Treasury’s mind,
Plaintiffs allege that the Notice of Finding and NPRM had an
“immediate impact” on BPA’s business.
See id., ¶ 43. Specifically, they believe the
Notices “directly caused the Andorran government to
seize BPA.” Id. In addition,
“BPA’s U.S. correspondent banks immediately froze
BPA’s accounts and refused further banking services,
thus cutting BPA off from the U.S. dollar market. BPA’s
non-U.S. dollar banking relationships worldwide also were
immediately terminated.” Id.
Plaintiffs’ Lawsuit & ...