Reining in the Long-Arm Jurisdiction of the United States Department of Justice

In December 2019, a jury in Brooklyn, New York, acquitted Jean Boustani, a lead salesman for a Lebanese shipbuilding company, on allegations that he helped to defraud US investors in bonds backed by the Mozambican government. The verdict was to be the first trial defeat suffered by the DOJ’s FCPA Unit in many years, and it appeared to represent a reproach of the DOJ’s long held position that it may prosecute foreign individuals for overseas corruption – its so-called “long-
arm jurisdiction.” Unlike in the UK, the jury spoke after the verdict, revealing the reasons why they acquitted, with one juror saying, “We couldn’t find any evidence of a tie to the Eastern District of New York.”

Commentators at the time warned against an elevated feeling of optimism, stating:

“We caution against reading too much into any particular jury verdict. Prosecution risks to foreign nationals allegedly involved in such schemes remain acute. It is easy to see a jury considering similar facts in another case reaching a different result.” [1]

 

They were not wrong. In August 2024, one of Boustani’s co-conspirators, Mozambique’s former finance minister Manuel Chang, who had been extradited from South Africa, was convicted of conspiracy to commit wire fraud and conspiracy to commit money laundering for his role in the “tuna bonds” scandal. The DOJ had clearly listened to the juror, who had explained why they acquitted Mr Boustani five years earlier and successfully adjusted their jurisdictional arguments to ensure the trial would not suffer the same fate.

However, that victory for the DOJ, in its ability to prosecute overseas corruption by foreign nationals, was dealt a blow on the 10th of February 2025, when President Trump signed an Executive Order [2] that, for a period of 180 days, amongst other directions, put a pause on new enforcement actions being taken under the FCPA. Whilst some judges [3]are set to incur the wrath of the Administration by ignoring the Executive Order, the likely impact will be that prosecutions are indeed delayed whilst a review takes place and/or they are discontinued entirely.

To add further misery to an already deflated DOJ, having suffered several high-profile resignations of its attorneys who refused to bow to demands to discontinue cases, on the 12th February 2025, the UK Supreme Court delivered a judgment that dispatches a sucker punch to the ability of US prosecutors to seek the extradition of those in the UK who are indicted for conduct that took place outside the US. Whilst not being a knockout blow, it certainly put the DOJ on the ropes.

The Supreme Court’s decision in El-Khouri v The Government of the United States [4] is likely to have sent seismic shockwaves through the DOJ – Particularly in the Southern District of New York (often referred to as the “Sovereign District”). Prosecutors there have consistently sought to extend their jurisdictional reach further and further abroad, leading some to claim that their long arm keeps getting longer.

Over a split hearing, The Supreme Court had to grapple with the definition of an “extradition offence” and the operation of the dual criminality requirement in section 137 of the Extradition Act 2003. And it was not the first time such a question had been considered by the UK’s top court.

For 20 years, since the decision of the House of Lords in Office of the King’s Prosecutor, Brussels v Cand Armas and another [5], conduct occurring “in” a Category 2 territory (i.e., a country outside the EU seeking a person’s extradition from the UK) could be held to include conduct that occurred outside that territory, depending on where the consequences of that conduct were intended to occur:

“Actings elsewhere will be sufficient to constitute conduct in that territory so long as their intended effect was to bring about harm within that territory.”

 

Judgments since then have been littered with findings of ‘intended effects bringing about harm’ in the requesting state. These judgments proceeded on the basis that, even if all acts comprising the offence occurred entirely outside the country seeking extradition, they could be deemed to have occurred “in” that country – provided that is where the effects were intended to be felt.

This was not the ratio decidendi of the decision in Cando Armas but rather the obiter dicta remarks of Lord Hope, with which all the other Lords agreed. Some erroneously declared after the decision in El-Khouri that Cando Armas had been overturned. That was to misunderstand the principle of stare decisis and the difference between a judgment’s ratio decidendi and its obiter dictum. The obiter remarks – which the Justices in El-Khouri described as “mistaken”, “flawed”, a “muddle”, “notwithstanding scrutiny”, “illogical”, “an error”, and “defective” – do not survive post El-Khouri, but the ratio remains intact, having not been questioned.

In order to be an extradition offence, the conduct alleged has to satisfy the conditions in one of s137(3)-(5). Putting aside s137(5) (which deals with offences attracting universal jurisdiction), the conditions to be met in order for conduct to be considered an extradition offence are:

(3) (a) the conduct occurs in the category 2 territory;

(ii) the conduct would constitute an offence under the law of the relevant part of the United
Kingdom, punishable with imprisonment or another form of detention for a term of 12
months, or a greater punishment if it occurred in that part of the United Kingdom;

(c) the conduct is so punishable under the law of the category 2 territory;

(4) The conditions in this subsection are that – (a) the conduct occurs outside the category 2 territory;

(b) in corresponding circumstances, equivalent conduct would constitute an extra-territorial
offence under the law of the relevant part of the United Kingdom, punishable with
imprisonment or another form of detention for a term of 12 months or a greater punishment;

(c) the conduct is so punishable under the law of the category 2 territory.

The Supreme Court in El-Khouri held that sections 137 (3) and 137 (4) are mutually exclusive. Section 137(3) applies if some or all of the conduct occurs in the
country seeking extradition. Section 137(4) applies if all of the conduct occurs outside the country seeking extradition. And for both section 137(3) and 137(4), and
in distinction to Lord Hope’s observations in Cando Armas, conduct occurring “in” the country seeking extradition means where the person’s acts specified in the extradition request were physically carried out, rather than the location of their intended effect.

Plainly, this interpretation may hamper the US’s ability to seek the extradition of those accused of cross-border criminality, who did not carry out any of the physical acts of their alleged offending in the US. For this purpose, the court is only concerned with where the person’s acts specified in the extradition request were physically carried out – ignoring “mere narrative background and focusing on the substance of the alleged criminality.” The court must no longer consider where any consequences of those acts were intended to be felt, (or indeed, where they were in fact felt). In Mr El-Khouri’s case, the Supreme Court was in no doubt that none of the conduct comprising the alleged offending brought the case within section 137(3): “Mr El-Khouri was not within the United States at the time when he is alleged to have done any act constituting or forming part of the alleged dealing; the dealing is not alleged to have occurred on a market regulated in the United States, and the professional intermediary allegedly relied on by Mr El-Khouri was not within the United States when the alleged dealing occurred”.

As such, the dual criminality analysis had to proceed under section 137(4). This required the court to consider whether an analogue offence would be committed under UK law if the “alleged conduct ofthe requested person (and any other relevant event) occurring outside the territory of the requesting state had occurred outside (the relevant part of) the UK (and vice-versa).” In other words, would the alleged conduct amount to an extra-territorial offence under UK law? In Mr El-Khouri’s case, the court was satisfied that it did not, since the analogue offence of insider dealing is strictly territorial in scope. Not deterred, the US then sought to equate the alleged conduct to an offence of money laundering under section 329 of the Proceeds of Crime Act 2002. In support of their argument as to the extraterritorial application of the Proceeds of Crime Act 2002, R v Rogers and others was cited and relied upon.

In that case, a UK citizen who lived in Spain, permitted money constituting criminal property obtained by defrauding persons in the UK, to be paid into and withdrawn from his Spanish bank account. He was convicted under Section 327(1)(c) of the Proceeds of Crime Act 2002. The Court of Appeal rejected his argument on appeal that the UK did not have jurisdiction, declaring the “provision at section 340(11)(d) that money laundering is an act which would constitute an offence (including one under section 327) if done in the United Kingdom, appears to admit of no other construction than that Parliament intended, extraterritorial effect to this legislation.”

Lord Hope was not the only one to come under attack. The Supreme Court in El-Khouri concluded that the case of Rogers was wrongly decided (which many commentators stated at the time it was decided). They suggested that

“It is unfortunate that counsel for the defendant and the court in Rogers failed to recognise that section 340(11)(d) merely defines “money laundering” and does not either create an offence itself or extend the territorial scope of the offences created by sections 327, 328 and 329 to acts done abroad”.

 

The Proceeds of Crime Act 2002, according to the Justices in El-Khouri, “does not provide that to acquire, use or possess abroad property derived from criminal conduct committed abroad, constitutes a criminal offence in the United Kingdom.” Thus, the US is not the only jurisdiction to be reined in by the Supreme Court’s decision – the UK’s exorbitant money laundering jurisdiction has also been cut back to its territorial size. This will come as welcome relief to many MLROs and lawyers who had previously been forced to prepare SARs on the assumption that entirely extraterritorial conduct gave rise to “criminal property”.

Whether US prosecutors will now seek to reframe (or refrain from initiating) their extradition requests to the UK remains to be seen. Clarifying the law is one thing, but changing a prosecutorial culture as entrenched as the DOJ’s is quite another. It also remains to be seen whether UK enforcement agencies will now feel more emboldened to commence their own investigations into conduct occurring in the UK. The FCA did not seek to prosecute the alleged conduct that Mr El-Khouri was accused of, concluding that there was insufficient evidence to provide for a realistic prospect of conviction. Similarly, the SFO refused to prosecute the late Mike Lynch for conduct that mainly occurred in the UK. Perhaps they will now be more eager to take the lead on prosecuting conduct that occurred in the UK, rather than ceding jurisdiction to their US counterparts. But again, that requires a change in prosecutorial culture alongside the correct understanding of criminal jurisdiction.

In ongoing extradition proceedings before Westminster Magistrates Court, pending judgments [5] have been adjourned to allow the parties to consider the impact of the decision in El-Khouri on the dual criminality exercise, to be conducted by the court of first instance. This has resulted in further information being served by the requesting state, not originally contained within the extradition request, which seeks to provide further detail on the US nexus, in order to strengthen
its jurisdictional claim that conduct occurred “in” its territory.

Jurisdictional arguments are rarely as clear-cut as they were in El Khouri; where a requested person is part of an alleged conspiracy or joint enterprise, the UK’s complex rules on the extraterritorial application of inchoate liability may provide a hook with which to
argue that some conduct occurred in the US.

But one thing is clear: the case of El-Khouri will inevitably lead to current cases before the UK courts (as well as future cases in the pipeline) being reconsidered on both sides of the Atlantic, where the extradition request frames the conduct as physically occurring outside the US.
President Trump’s dramatic actions have cast doubt on whether the DOJ will remain as the world’s policing entity for financial crime – and The UK Supreme Court has now played its part in reining in the DOJ’s famous long arm jurisdiction.

1. https://www.dlapiper.com/en-gb/insights/publications/2019/12/jury-acquits-jean-boustani-in-apparent-rebuke-of-dojs-attempt-to-police-overseas-corruption
2. https://www.whitehouse.gov/presidential-actions/2025/02/pausing-foreign-corrupt-practices-act-enforcement-to-further-american-economic-and-national-security/
3. https://www.bloomberg.com/news/articles/2025-03-11/judge-denies-long-delay-of-bribery-case-in-test-of-trump-order
4. https://supremecourt.uk/cases/judgments/uksc-2023-0127
5. https://www.law360.com/corporate-crime-uk/articles/2306240