REPLY IN SUPPORT OF MOTION TO DISMISS BY DEFENDANTS JACOB LEW, U.S. DEPARTMENT OF THE TREASURY, JENNIFER SHASKY CALVERY, AND THE FINANCIAL CRIMES ENFORCEMENT NETWORK_February 18, 2016

8/15/2019 REPLY IN SUPPORT OF MOTION TO DISMISS BY DEFENDANTS JACOB LEW, U.S. DEPARTMENT OF THE TREASURY, JENNIFER SHASKY CALVERY, AN…

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

RAMON CIERCO, et al.,

Plaintiffs,

v. Civil Action No. 15-1641 (JEB)

JACOB LEW, in his official capacity as

Secretary of the Treasury, et al.,

Defendants,

and

BANCA PRIVADA D’ANDORRA S.A., inreceivership,

Nominal Defendant.

REPLY IN SUPPORT OF MOTION TO DISMISS BY DEFENDANTS JACOB LEW,

U.S. DEPARTMENT OF THE TREASURY, JENNIFER SHASKY CALVERY,

AND THE FINANCIAL CRIMES ENFORCEMENT NETWORK

Case 1:15-cv-01641-JEB Document 32 Filed 02/18/16 Page 1 of 33


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TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iii

INTRODUCTION ...........................................................................................................................1

DISCUSSION ..................................................................................................................................1

I. Plaintiffs Lack Standing .......................................................................................................1

A. Plaintiffs have not established redressability ...........................................................2

B. Plaintiffs do not have standing to challenge FinCEN’s proposedrule on behalf of BPA ..............................................................................................6

C. Plaintiffs’ claims should also be dismissed on ripeness grounds ..........................10

II. The APA Does Not Permit Plaintiffs’ Challenge to Non-Final

Agency Action ...................................................................................................................11

III. Plaintiffs Fail to State a Due Process Claim ......................................................................15

A. Plaintiffs cannot establish a deprivation by the government .................................16

B. Plaintiffs still lack a sufficiently pled constitutional presence...............................19

C. Plaintiffs are receiving more than adequate process ..............................................23

CONCLUSION ..............................................................................................................................25



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TABLE OF AUTHORITIES

Cases

Abigail All. for Better Access to Developmental Drugs v. Eschenbach,

469 F.3d 129 (D.C. Cir. 2006) ................................................................................................... 5

Action on Smoking and Health v. Dep’t of Labor,

28 F.3d 162 (D.C. Cir. 1994) ................................................................................................... 13

*Am. Mfrs. Mut. Ins. Co. v. Sullivan,526 U.S. 40 (1999) ............................................................................................................ 16, 17

Ams. for Safe Access v. DEA,

706 F.3d 438 (D.C. Cir. 2013) ................................................................................................... 3

Bennett v. Donovan,703 F.3d 582 (D.C. Cir. 2013) ................................................................................................... 3

Bennett v. Spear,

520 U.S. 154 (1997) .................................................................................................... 11, 12, 13

Better Gov’t Ass’n v. Dep’t of State,780 F.2d 86 (D.C. Cir. 1986) ................................................................................................... 11

Block v. Meese,

793 F.2d 1303 (D.C. Cir. 1986) ................................................................................................. 3

Blum v. Yaretsky,457 U.S. 991 (1983) ................................................................................................................ 17

Boumediene v. Bush,

552 U.S. 723 (2008) ................................................................................................................. 21

Briscoe v. Costco Wholesale Corp.,61 F. Supp. 3d 78 (D.D.C. 2014) ............................................................................................. 20

Ciba–Geigy Corp. v. EPA,

801 F.2d 430 (D.C. Cir. 1986) ................................................................................................. 11

City of Harper Woods Emples. Ret. Sys. v. Olver,589 F.3d 1292 (D.C. Cir. 2009) ............................................................................................. 6, 7

32 Cty. Sovereignty Comm. v. Dep't of State,

292 F.3d 797 (D.C. Cir. 2002) ........................................................................................... 20, 22



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*Ctr. for Auto Safety v. Nat’l Highway Traffic Safety Admin.,452 F.3d 798 (D.C. Cir. 2006) ........................................................................................... 11, 12

Doe v. U.S. Dep’t of Justice,

753 F.2d 1092 (D.C. Cir. 1985) ......................................................................................... 18, 19

FBME Bank Ltd. v. Lew, No. 15-1270, 2015 WL 5081209 (D.D.C. Aug. 27, 2015) ................................................ passim

In re Fed. Nat. Mortgage Ass’n Sec., Derivative, & “ERISA” Litig.,

503 F. Supp. 2d 9 (D.D.C. 2007) .............................................................................................. 10

Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd.,493 U.S. 331 (1990) .................................................................................................................. 6

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,

528 U.S. 167 (2000) .................................................................................................................. 6

FTC v. Standard Oil Co.,449 U.S. 232 (1980) ................................................................................................................ 14

Gail C. Sweeney Estate Marital Trust v. United States Treasury Dep’t,

68 F. Supp. 3d 116 (D.D.C. 2014) ........................................................................................... 10

General Electric v. Jackson,610 F.3d 110 (D.C. Cir. 2010) ........................................................................................... 18, 19

Heartland Reg’l Med. Ctr. v. Leavitt,

415 F.3d 24 (D.C. Cir. 2005) ..................................................................................................... 5

*In re Murray Energy Corp.,788 F.3d 330 (D.C. Cir. 2015) ..................................................................................... 13, 14, 15

Int’l Union, United Auto., Aerospace & Agr. Implement Workers of America v. Brock,

783 F.2d 237 (D.C. Cir. 1986) ................................................................................................. 10

Kadi v. Geithner,42 F. Supp. 3d 1 (D.D.C. 2012) ............................................................................................... 21

Kaempe v. Myers,

367 F.3d 958 (D.C. Cir. 2004) ................................................................................................. 16

Kamen v. Kemper Fin. Servs.,500 U.S. 90 (1991) .................................................................................................................... 9



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Lujan v. Defs. of Wildlife,504 U.S. 555 (1992) .................................................................................................................. 2

McCarthy v. Madigan,

503 U.S. 140 (1992) .................................................................................................................. 9

Mosrie v. Barry,718 F.2d 1151 (D.C. Cir. 1983) ............................................................................................... 18

Nat’l Ass’n of Home Builders v. Norton,

415 F.3d 8 (D.C. Cir. 2005) ..................................................................................................... 12

*Nat’l Coal Against the Misuse of Pesticides v. Thomas,809 F.2d 875 (D.C. Cir. 1987) ................................................................................................. 23

Nat’l Council of Resistance of Iran v. Dep’t of State,

251 F.3d 192 (D.C. Cir. 2001) ........................................................................................... 20, 21

Nat’l Parks Conservation Ass’n v. Manson,414 F.3d 1 (D.C. Cir. 2005) ....................................................................................................... 3

Nevada v. Dep’t of Energy,

457 F.3d 78 (D.C. Cir. 2006) ................................................................................................... 11

Old Dominion Dairy Products, Inc. v. Sec’y of Def.,631 F.2d 953 (D.C. Cir. 1980) .................................................................................................. 18

*Paul v. Davis,

424 U.S. 693 (1976) .......................................................................................................... 18, 19

Perry Capital v. Lew,70 F. Supp. 3d 208 (D.D.C. 2014) ........................................................................................... 10

Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines,

534 F.3d 779 (D.C. Cir. 2008) ................................................................................................... 9

Pub. Citizen v. Office of U.S. Trade Representatives,970 F.2d 916 (D.C. Cir. 1992) ................................................................................................. 10

Reliable Automatic Sprinkler Co., Inc. v. Consumer Prod. Safety Comm’n,

324 F.3d 726 (D.C. Cir. 2003) ................................................................................................. 12

*Renal Physicians Ass’n v. HHS,489 F.3d 1267 (D.C. Cir. 2007) ......................................................................................... 2, 3, 4



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Siegert v. Gilley,500 U.S. 226 (1991) ................................................................................................................ 18

Sloan v. Urban Title Servs., Inc.,

689 F. Supp. 2d 94 (D.D.C. 2010) ........................................................................................... 20

Tozzi v. HHS,271 F.3d 301 (D.C. Cir. 2001) ............................................................................................... 2, 3

Trifax Corp. v. District of Columbia,

314 F.3d 641 (D.C. Cir. 2003) ................................................................................................. 18

United States v. 8848 S. Commercial St., Chicago, Ill.,757 F. Supp. 871 (N.D. Ill. 1990) ............................................................................................ 14

United States v. Union Bank For Sav. & Inv. (Jordan),

487 F.3d 8 (1st Cir. 2007) ....................................................................................................... 22

United States v. Verdugo-Urquidez,494 U.S. 259 (1990) ................................................................................................................ 20

Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council,

435 U.S. 519 (1978) ................................................................................................................ 23

Vill. of Bensenville v. FAA,457 F.3d 52 (D.C. Cir. 2006) ................................................................................................... 17

Statutes

5 U.S.C. § 704 ............................................................................................................................... 115 U.S.C. § 706(2) ............................................................................................................................ 5

21 U.S.C. § 881 ............................................................................................................................. 1431 U.S.C. § 5311 ........................................................................................................................... 24

31 U.S.C. § 5318A .......................................................................................................... 5, 6, 14, 1531 U.S.C. § 5318A(a)(1) ......................................................................................................... 13, 14

31 U.S.C. § 5318A(a)(2) ............................................................................................................... 1331 U.S.C. § 5318A(a)(2)(C) ......................................................................................................... 15

Regulations and Rules

80 Fed. Reg. 13,304 ................................................................................................................ 16, 17

80 Fed. Reg. 13,464 ........................................................................................................................ 580 Fed. Reg. 45,057 ...................................................................................................................... 13

Fed. R. Civ. P. 23.1 ......................................................................................................................... 9



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Legislative Materials

H.R. Conf. Rep. 108-381 .............................................................................................................. 22

Miscellaneous

Government Accountability Office, USA PATRIOT Act: Better InteragencyCoordination and Implementing Guidance for Section 311 Could Improve

U.S. Anti-Money Laundering Efforts, GAO-08-1058 ......................................................... 5, 12

Int’l Business Publications, Andorra: Business Law Handbook 11 (6th ed. 2008) ....................... 7

Llei 20/2007, del 18 d’octubre, de societats anònimes i de responsabilitat limitada, published as amended in 19 Butlletí Oficial del Principat d’Andorra 1062 (Mar. 5, 2014) ..... 7

Martin Gelter, Why do Shareholder Derivative Suits Remain Rare in Continental Europe?,

37 Brook. J. Int’l L. 843 ............................................................................................................. 7

Press Release, L’AREB informa que ha finalitzat la primera fase del procés de venda

de Vall Banc, S.A.U. (Nov. 11, 2015) ....................................................................................... 4



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INTRODUCTION

As plaintiffs’ opposition makes clear, their real quarrel with the challenged notice of

finding and proposed rule is not with the process that the Financial Crimes Enforcement Network

(“FinCEN”) used, but with the fact that the agency began that process at all. Essentially,

plaintiffs contend that by following the statutory mandate that Congress laid out, and by merely

proposing the imposition of the fifth special measure, FinCEN violated not only the

Administrative Procedure Act (“APA”) but also the Constitution. The agency has done no such

thing. Plaintiffs challenge non-final action, and they set forth no reason for this Court to

abandon the well-established case law in this Circuit limiting challenges to agency action to

those that are final. Moreover, plaintiffs’ alleged injuries stem not from the agency’s proposed

actions, but from the independent actions of a foreign sovereign—injuries that are neither fairly

traceable to the agency nor redressable by this Court. Finally, plaintiffs fail to state a due

process claim. Even if plaintiffs’ complaint had identified any specific, substantial connections

with the United States entitling them to due process protections, the public rulemaking process

that Congress prescribed has given them notice and opportunity to be heard on the proposed

action. Due process requires no more, and this case should be dismissed in its entirety.

DISCUSSION

I. Plaintiffs Lack Standing

Plaintiffs do not seriously contest that, under D.C. Circuit precedent, a federal agency

does not inflict an Article III injury when it proposes a regulation. See Defs.’ Mem. in Supp. of

Mot. to Dism. at 12-14, ECF No. 29-1 (“FinCEN Mem.”). Their standing argument instead

hinges on the notion that the publication of the Notice of Finding (“NOF”) and Notice of

Proposed Rulemaking (“NPRM”) has inflicted downstream injuries. See Pls.’ Mem. of Law in



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Opp’n to Defs.’ Mot. to Dism. at 22-27, ECF No. 31 (“Opp.”). But that contention conflates

proposed agency action with legal compulsion on regulated parties, and fails to respect crucial

distinctions between the U.S. and foreign governments. It is insufficient to create standing.

A. Plaintiffs have not established redressability

Where redressability “depends on the unfettered choices made by independent actors not

before the courts and whose . . . discretion the courts cannot presume either to control or to

predict, . . . standing is not precluded, but it is ordinarily substantially more difficult to

establish.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 562 (1992) (emphasis added); see also

Renal Physicians Ass’n v. HHS, 489 F.3d 1267, 1274 (D.C. Cir. 2007) (“[S]tanding to challenge

a government policy cannot be founded merely on speculation as to what third parties will do in

response to a favorable ruling.”). So it is here.

Plaintiffs’ claims depend upon the following chain of inferences: FinCEN’s publication

of the NOF and NPRM prompted U.S. banks to end their business relationships with Banca

Privada d’Andorra (“BPA”). Compl. ¶¶ 2, 43. This led the Institut Nacional Andorrà de

Finances (“INAF”) to place BPA in administration, id. ¶¶ 22, 24, 27, and the Andorran

parliament to enact a law creating a new agency for the restructuring and resolution of banks, id.

¶ 27. Finally, the new agency, the Agència Estatal de Resolució d’Entitats Bancàries (“AREB”)

approved a resolution plan for BPA, which allegedly injured the plaintiffs as shareholders. Id.

¶¶ 27, 45.

Redressability therefore depends upon the actions of two kinds of third parties—

U.S. banks, which ended their business relationships with BPA despite being under no legal

requirement to do so, and AREB, an agency of a sovereign foreign government—whose

independent choices the Court “cannot presume either to control or to predict.” Lujan, 504 U.S.



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at 562 (citations omitted). Thus, plaintiffs’ reliance on the D.C. Circuit’s decisions in Tozzi v.

HHS, 271 F.3d 301 (D.C. Cir. 2001), and Block v. Meese, 793 F.2d 1303 (D.C. Cir. 1986), is

misplaced.1 Neither case changes the basic rule where redressability depends upon the actions of

third parties: “[T]o establish redressability at the pleading stage, we required more than a bald

allegation; we required that the facts alleged be sufficient to demonstrate a substantial likelihood

that the third party directly injuring the plaintiff would cease doing so as a result of the relief the

plaintiff sought.” Renal Physicians Ass’n, 489 F.3d at 1275.2 And neither case demonstrates

that redressability could be satisfied under the circumstances presented here, particularly given

the unknowable future actions of AREB.

Plaintiffs’ reliance on a March 2015 press release issued by INAF cannot salvage their

redressability argument. Opp. at 22 & n.11 (citing Pls.’ Mot. Summ. J. Ex. 18). First, that press

release was not issued by AREB, the Andorran agency that is now responsible for the resolution

of BPA; second, it does not establish that, having taken control of BPA and conducted its own

extensive investigation of the bank’s activities, AREB is even considering abandoning the bridge

1 In Tozzi, the D.C. Circuit found that a manufacturer had standing to challenge the classificationof dioxin as a carcinogen, because “[s]tate and local governments would be less likely to regulate

dioxin, and healthcare companies would in turn be less likely to stop using PVC plastic,” ifdioxin were ordered reclassified. 271 F.3d at 310. In Block, the Court of Appeals found that a

film distributor had standing to challenge the classification of certain films as “political propaganda,” because the distributor submitted declarations and affidavits detailing specific

instances in which potential customers declined to exhibit a particular film due to theclassification. 793 F.2d at 1308.

2 The other cases cited by plaintiffs are similarly concerned with the behavior of directly

regulated entities or other federal agencies. See Bennett v. Donovan, 703 F.3d 582, 586-88(D.C. Cir. 2013) (HUD and private entities it “heavily regulated”); Ams. for Safe Access v.

DEA, 706 F.3d 438, 449 (D.C. Cir. 2013) (VA, as a federal agency, was “surely inclined tosubscribe to” fellow federal agency DEA’s listing of marijuana as a Schedule I substance); Nat’l

Parks Conservation Ass’n v. Manson, 414 F.3d 1, 6 (D.C. Cir. 2005) (state authority acted pursuant to federal agency’s impact letter, which was “virtually dispositive of the state

permitting decision”).



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bank it has created and reconstituting BPA in its prior form; and third, it does not establish that

AREB would be likely to take that course of action were the NPRM set aside.

INAF’s statement that it wished to conduct its own investigation in order to “clarify the

facts” motivating FinCEN’s publication of the NOF and NPRM falls well short of a statement

that AREB’s actions are dependent on the actions of FinCEN, or, indeed, a statement that

FinCEN is capable of influencing the course or outcome of the resolution proceedings. AREB is

engaged in its own resolution process of BPA pursuant to Andorran law, has created a bridge

bank for the sale of BPA’s “good” assets, and has eight bidders participating in a process for

acquiring Vall Banc, the new entity created by the resolution process.

3

The D.C. Circuit has

recognized that, even assuming arguendo some degree of causation, “causation does not

inevitably imply redressability.” Renal Physicians Ass’n, 489 F.3d at 1278. Redressability does

not exist where, as here, “the new status quo is held in place by other forces.” Id.; see also

Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015) (“we may reject as overly speculative those

links which are predictions of future events (especially future actions to be taken by third

parties)”). Further, the bare allegation that the Andorran government has “adopted a policy to

cooperate with FinCEN,” Compl. ¶ 27, which pleads no specific facts regarding the scope or

scale of cooperation, does not establish that FinCEN controls the outcome or direction of the

resolution proceedings, or has control over Andorra’s own criminal investigation of money

laundering at BPA.

Nor can plaintiffs establish that, even if AREB were to decide to abandon its resolution of

BPA and reconstitute the bank in its prior form, U.S. financial institutions would choose to re-

3 Press Release, AREB, L’AREB informa que ha finalitzat la primera fase del procés de venda de

Vall Banc, S.A.U. (Nov. 11, 2015) (“AREB wishes to communicate the finalization of the first phase” “of the sale process of Vall Banc.”), available at http://areb.ad/images/areb/comunicats/

11112015_AREB_ENG.pdf.



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open the bank’s correspondent accounts. In arguing otherwise, plaintiffs cite a supposedly

“astonishing” statement found on page 11 of FinCEN’s opening brief. Opp. at 26. But this is

just misplaced indignation. FinCEN’s brief was simply noting that, while the APA provides the

courts with the authority to “set aside” agency action found to be arbitrary and capricious, see 5

U.S.C. § 706(2), relief obtained in this action will not grant BPA permanent immunity from the

imposition of a special measure. “[T]he usual rule is that, with or without vacatur, an agency

that cures a problem identified by a court is free to reinstate the original result on remand.”

Heartland Reg’l Med. Ctr. v. Leavitt, 415 F.3d 24, 29-30 (D.C. Cir. 2005). Thus, plaintiffs can

only speculate that U.S. financial institutions, the other category of third parties upon whom

redressability depends, would re-open their correspondent accounts with BPA if this matter were

remanded to FinCEN, given that U.S. financial institutions were and are under no present legal

obligation to terminate any correspondent accounts with BPA as a result of the NOF and NPRM,

and yet, chose to terminate their relationships with BPA despite the lack of binding legal action.

See FinCEN Mem. at 10-11.

Courts can presume that companies will act in their “pecuniary interests,” Abigail All. for

Better Access to Developmental Drugs v. Eschenbach, 469 F.3d 129, 135 (D.C. Cir. 2006), and

take advantage of future business opportunities, but the Court need not blind itself to how those

companies have actually behaved in the past, or to the existence of other disincentives to action.

Indeed, one domestic financial institution terminated its relationship with BPA prior to the

publication of the NOF and NPRM based on its own review of alleged money laundering

activity. See Notice of Finding, 80 Fed. Reg. 13,464, 13,465 (Mar. 13, 2015). Further, U.S.

financial institutions have ample incentives to maintain robust anti-money laundering controls

based on their own review of activity in that account, or indeed based on law enforcement



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activity by foreign governments. Indeed, the GAO Report on which plaintiffs place such heavy

reliance noted this same point. See Government Accountability Office, USA PATRIOT Act:

Better Interagency Coordination and Implementing Guidance for Section 311 Could Improve

U.S. Anti-Money Laundering Efforts, GAO-08-1058, at 22 (“GAO Report”) (“Moreover, U.S.

financial institutions must take publicly available information into account when implementing

their anti-money laundering programs and assessing risks”). Even if plaintiffs were to obtain

relief from this Court on the merits, that decision would address only one specific proposed

imposition of a special measure under section 5318A. But law enforcement authorities in

Andorra are conducting their own criminal investigation of individuals affiliated with BPA.

FinCEN Mem. at 5. FinCEN’s NOF and NPRM are thus not the only reason why U.S. financial

institutions would be wary of transacting business with BPA, even assuming that AREB

abandoned the liquidation proceeding. In light of this, plaintiffs simply cannot establish that it is

“likely, as opposed to merely speculative,” that a favorable order from this Court would redress

the third-party injuries that motivated their complaint. Friends of the Earth, Inc. v. Laidlaw

Envtl. Servs. (TOC), Inc., 528 U.S. 167, 187 (2000).

B. Plaintiffs do not have standing to challenge FinCEN’s proposed rule on

behalf of BPA

Plaintiffs also fail to establish standing to challenge the proposed rule on BPA’s behalf.

They do not dispute that a claim of harm to a corporation belongs to the corporation itself, which

is a distinct legal entity, and thus that a shareholder ordinarily lacks prudential standing to raise

it. See FinCEN Mem. at 16-17 (citing Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd., 493

U.S. 331, 336 (1990)). Nor do they dispute that whether a shareholder may bring a derivative

suit on behalf of a corporation depends on the law in the place of incorporation (here, Andorra).

Id. at 14-15 (citing, inter alia, City of Harper Woods Emps. Ret. Sys. v. Olver, 589 F.3d 1292,



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1299 (D.C. Cir. 2009)). And they do not dispute that it is “plaintiffs [who] bear the burden of

establishing standing to bring a derivative suit.” Id. at 14-15 (quoting Harper Woods, 589 F.3d

at 1299). Nevertheless, they point to no Andorran law or case recognizing the existence of a

shareholder derivative action. That failure dooms their derivative claims.

Plaintiffs instead invite the Court to invent a derivative action under Andorran law,

noting that such actions exist in France and Spain. Opp. at 30-31. But in both of those countries,

derivative actions are specifically authorized by statute—in France’s 1867 Loi sur les Sociétés

and in Spain’s 1989 Ley de Sociedades Anónimas. Martin Gelter, Why do Shareholder

Derivative Suits Remain Rare in Continental Europe?, 37 Brook. J. Int’l L. 843, 854-55 & nn.46,

50 (2012) (cited in Opp. at 30-31). Yet plaintiffs do not claim that Andorra’s own corporate

statute, the 2007 Llei de Societats Anònimes i de Responsabilitat Limitada—which was enacted

well after the statutes adopted in France and Spain—authorizes derivative claims.4 Thus, even if

plaintiffs were correct that Andorran courts sometimes “look to French and Spanish law” to fill

“gaps in [their] jurisprudence”—an utterly unsupported assertion5 —this sequence suggests a

deliberate choice by the Andorran parliament, not a “gap” in need of filling. Regardless, even in

European countries where derivative suits are permitted, those “actions are limited in scope” as

“compared to the United States.” Gelter, supra, at 875. Indeed, in France and Spain, “derivative

4 See Llei 20/2007, del 18 d’octubre, de societats anònimes i de responsabilitat limitada,

published in 19 Butlletí Oficial del Principat d’Andorra 1062 (Mar. 5, 2014), available athttp://www.apttcb.cat/files/documentacion/7201_0_BOPA-DecretSLiSA5-3-14.pdf.

5 This assertion is absent from the declaration that plaintiffs submit, and is not supported by the

business law “handbook” that plaintiffs cite, which states only: “Legal system: based on Frenchand Spanish civil codes; no judicial review of legislative acts; has not accepted compulsory ICJ

jurisdiction.” Int’l Business Publications, Andorra: Business Law Handbook 11 (6th ed. 2008)(cited in Opp. at 30 n.19), available at https://books.google.com/books?id=vDylDllW1L8C&q

=french#v=snippet&q=french&f=false.



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suits are only available for claims to damages . . . and are not available for injunctions,” id. at

876—the only form of relief that plaintiffs seek here.6

Plaintiffs’ declaration cannot rescue their derivative claims. As relevant here, it states

only that:

There is no law in the Principality of Andorra that forbids a shareholder from filing alegal action in defense of their interests, against the damages that may be caused to a

company of which they are a shareholder.

Opp. Ex. 1 ¶ 4. Even if it were clear that the declarant were addressing “derivative” actions—a

word he does not use—this declaration would fall well short of the mark. First, to say that no

law “forbids” the “filing” of a claim is not to say that the law “authorizes” such a claim, as

plaintiffs must to meet their burden. Cf. Gelter, supra, at 876 (“In all of the countries surveyed

here, the legal basis for derivative suits is, in all cases, found in a section of the respective

corporate law governing directors’ liability.”). Second, the declarant speaks of a potential action

only for “damages,” not for the sort of injunctive relief that plaintiffs seek here. Regardless, that

the declarant is unable to cite any Andorran law or case recognizing a shareholder derivative

action—despite his “33 years of experience as an attorney in Andorra,” Opp. Ex. 1 ¶ 1—is

convincing evidence that such actions do not exist there.

Because plaintiffs fail to show that a shareholder derivative action exists under Andorran

law at all, the Court need not address the separate, threshold questions concerning whether

plaintiffs have satisfied any prerequisites for bringing such a claim, such as (1) whether they

were required to demand that BPA’s administrator bring suit against Defendants before doing so

themselves; and (2) whether any such demand requirement should be excused as futile. Should

6 These are not the only limitations on foreign derivative suits left unexplored in plaintiffs’ brief.

For example, in France, a shareholder must also demonstrate a “management mistake” as a

prerequisite to suit. Gelter, supra, at 871.



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the Court nevertheless decide to reach these issues, it should find as a matter of equity that

demand was required and cannot be excused here. Indeed, a contrary ruling would permit

plaintiffs to not only create a derivative action under Andorran law, but also to give that action

more generous contours than are generally available even in the United States, let alone

elsewhere in Europe. Cf. Gelter, supra, at 875.

In the United States, courts of equity established demand requirements to “prevent abuse”

of the shareholder derivative suit and “to protect the directors’ prerogative to take over the

litigation or to oppose it.” Kamen v. Kemper Fin. Servs., 500 U.S. 90, 95-96, 101 (1991). “In

most jurisdictions, the board’s decision to do the . . . latter is subject only to the deferential

‘business judgment rule’ standard of review.” Id. at 101 (citations omitted). Federal Rule of

Civil Procedure 23.1 facilitates this review, requiring a plaintiff to “state with particularity . . .

any effort . . . to obtain the desired action from the directors or other authority” and “the reasons

for not obtaining the action or not making the effort.” Fed. R. Civ. P. 23.1(b). Here, requiring

demand is consistent with these principles, particularly since any decision not to expend

corporate funds challenging a proposed rule with no legal effect would easily satisfy the business

judgment rule. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines, 534 F.3d

779, 791 (D.C. Cir. 2008) (under Delaware law, “the business judgment rule protects decisions

unless ‘no reasonable business person’ would have made the decision”).

Plaintiffs make no attempt to establish that demand may be excused as futile under

Andorran law, which controls the relationship between a corporation and its shareholders. See

Kamen, 500 U.S. at 101-02. And the few futility cases they do cite—which deal with garden-

variety administrative exhaustion, not corporate demands—are inapposite. See Opp. at 32

(citing, inter alia, McCarthy v. Madigan, 503 U.S. 140, 148 (1992)). As Defendants have



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explained, demand futility is not established simply by alleging that the Administrator would be

unlikely to file suit if asked; rather, plaintiffs must point to some personal financial benefit for

the Administrator, or some material detriment experienced by the Administrator but not other

stockholders. FinCEN Mem. at 18 (citing In re Fed. Nat. Mortgage Ass’n Sec., Derivative &

“ERISA” Litig., 503 F. Supp. 2d 9, 17 (D.D.C. 2007) (citations omitted)). To that, plaintiffs

have no answer. Their derivative claims should be dismissed for lack of standing.7

C. Plaintiffs’ claims should also be dismissed on ripeness grounds

Finally, plaintiffs’ challenge to a non-final agency action should be dismissed as unripe.

While plaintiffs insist that the issues presented in this case are “purely legal,” Opp. at 17, and

thus that there is no need to wait for final agency action before commencing review, in the case

that they cite in support of this argument, International Union, United Automobile, Aerospace &

Agricultural Implement Workers of America v. Brock, 783 F.2d 237 (D.C. Cir. 1986), the D.C.

Circuit determined that review was appropriate only after concluding that “the challenged

interpretation qualifies as sufficiently ‘final.’” Id. at 250. Even assuming that the issues in a

case are purely legal, which is generally not true when a plaintiff challenges agency

decisionmaking as arbitrary and capricious, “[w]here finality is an independent jurisdictional

requirement (as here), it must be met. Even if only purely legal issues remained . . . that would

not obviate the need for finality itself.” Pub. Citizen v. Office of U.S. Trade Representative, 970

F.2d 916, 921 (D.C. Cir. 1992). Accordingly, in cases challenging agency action, the D.C.

7 Because plaintiffs do not attempt to invoke a “conflict of interest” exception to the demandrequirement, the Court need not address it. In any event, plaintiffs misunderstand the relevance

of Perry Capital v. Lew, 70 F. Supp. 3d 208 (D.D.C. 2014). Perry illustrates the principle that,when the control of a corporation is vested in a receiver, a shareholder cannot circumvent a

demand requirement simply by claiming that the receiver has a “conflict of interest.” Id. at 231-33; see also Gail C. Sweeney Estate Marital Trust v. U.S. Treasury Dep’t, 68 F. Supp. 3d 116,

125 & n.11 (D.D.C. 2014).



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Circuit has consistently held that “final agency action pursuant to the Administrative Procedure

Act is a crucial prerequisite to ripeness.” Nevada v. Dep’t of Energy, 457 F.3d 78, 85 (D.C. Cir.

2006) (alterations and citations omitted); see also Better Gov’t Ass’n v. Dep’t of State, 780 F.2d

86, 88 (D.C. Cir. 1986) (same). The Court should not chart a different course here.

II. The APA Does Not Permit Plaintiffs’ Challenge to Non-Final Agency Action

The APA limits judicial review to “[a]gency action made reviewable by statute and final

agency action for which there is no other adequate remedy in a court.” 5 U.S.C. § 704. No

statute provides for review of FinCEN’s publication of an NOF and NPRM, and neither qualifies

as “final agency action.” See FinCEN Mem. at 20-26. Final agency action must “mark the

consummation of the agency’s decisionmaking process,” and must “be one by which rights or

obligations have been determined, or from which legal consequences will flow.” Bennett v.

Spear, 520 U.S. 154, 1770-78 (1997) (citation omitted). A proposed rule is, by definition,

tentative and has no legal effect, and a notice of finding is not the “consummation” of any

agency decisionmaking process, and it creates no rights, fixes no obligations, and has no legal

force.

Plaintiffs appear to suggest that the Court discard the finality requirements announced in

Bennett and adopt a “flexible” approach based on the consequences of the challenged agency

action. Opp. at 15-21.8 “The flaw” in this argument, as the Court of Appeals has squarely held,

“is that the ‘consequences’ to which they allude are practical, not legal.” Ctr. for Auto Safety v.

Nat’l Highway Traffic Safety Admin., 452 F.3d 798, 811 (D.C. Cir. 2006). Plaintiffs construct

8 To the extent that plaintiffs believe an end-run around Bennett can be justified by relying on the

“flexible and pragmatic approach to finality, as endorsed in decisions such as Ciba-Geigy Corp.

v. EPA, 801 F.2d 430 (D.C. Cir. 1986),” Ctr. for Auto Safety, 452 F.3d at 811, it bears notingthat the D.C. Circuit has held that circuit decisions such as Ciba-Geigy “cannot obviate the

holding of Bennett.” Id.



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their argument upon financial institutions’ voluntary compliance with proposed rules announced

by FinCEN, repeatedly citing a Government Accountability Office report published eight years

ago, which noted that domestic financial institutions often take action on their own with respect

to suspected money laundering institutions after FinCEN announces proposed special measures.

See Opp. at 4, 5, 6, 20 (citing GAO Report). But that report noted that when an NPRM is

published, banks “implement it voluntarily,” GAO Report at 21 (emphasis added), and never

claimed that an NPRM was binding.

Voluntary compliance with a proposed rule does not convert it to final agency action.

Final agency action must determine “rights or obligations,” or fix “legal consequences.”

Bennett, 520 U.S. at 177-78 (emphasis added). D.C. Circuit precedent interpreting Bennett has

rejected the argument that voluntary compliance with a non-binding proposal can constitute de

facto final agency action. See Ctr. for Auto Safety, 452 F.3d at 811 (“It may be that, to the

extent that they actually prescribe anything, the agency’s guidelines have been voluntarily

followed by automakers and have become a de facto industry standard for how to conduct

regional recalls. But this does not demonstrate that the guidelines have had legal

consequences.”); Nat’l Ass’n of Home Builders v. Norton, 415 F.3d 8, 15 (D.C. Cir. 2005) (“[I]f

the practical effect of the agency action is not a certain change in the legal obligations of a party,

the action is non-final for the purpose of judicial review.”); Reliable Automatic Sprinkler Co. v.

Consumer Prod. Safety Comm’n, 324 F.3d 726, 732 (D.C. Cir. 2003) (“No legal consequences

flow from the agency’s conduct to date, for there has been no order compelling Reliable to do

anything. . . . [T]he request for voluntary compliance clearly has no legally binding effect.”).

Neither the NPRM nor the NOF imposes legal consequences or fixes rights and

obligations. As the D.C. Circuit held just last year, “[p]roposed rules meet neither of the two



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requirements for final agency action: (i) They are not the ‘consummation of the agency’s

decisionmaking process,’ and (ii) they do not determine ‘rights or obligations,’ or impose ‘legal

consequences.’” In re Murray Energy Corp., 788 F.3d 330, 334 (D.C. Cir. 2015) (quoting

Bennett, 520 U.S. at 177-78); see also Action on Smoking and Health v. Dep’t of Labor, 28 F.3d

162, 165 (D.C. Cir. 1994) (“Agency action is final when it imposes an obligation, denies a right,

or fixes some legal relationship,” and an agency’s “proposed rulemaking generates no such

consequences.”) (citation omitted). The NOF, similarly, imposes no legal consequences and

fixes no rights or obligations. See FinCEN Mem. at 22. Under section 5318A, the sole

consequence of the publication of a NOF is that FinCEN “may require domestic financial

institutions and domestic financial agencies to take 1 or more of the special measures.” 31

U.S.C. § 5318A(a)(1) (emphasis added). Special measures, however, cannot be imposed without

further procedural requirements, and the fifth special measure—which was proposed in the

NPRM at issue here—may be imposed only by following the informal rulemaking process. Id.

§ 5318A(a)(2).

Plaintiffs brush past the test for finality by claiming that the NOF marks the

consummation of FinCEN’s decisionmaking process and announced “a finding which would not

be revisited.” Opp. at 17. That assertion is incorrect. An NOF may be updated or amended

during a rulemaking proceeding based on comments from interested parties. See, e.g.,

Imposition of Special Measure Against FBME Bank Ltd., 80 Fed. Reg. 45,057, 45,059 (July 29,

2015) (“FinCEN believes that it is appropriate . . . to amend the NOF based on these

comments.”). Additionally, an NOF is not the “consummation” of a decisionmaking process

because it merely begins the process of determining whether a special measure should be

imposed. See 31 U.S.C. § 5318A(a)(1). Even setting aside that fault, plaintiffs address only half



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of the relevant test. Statements or findings made in support of a proposed special measure are

not themselves final agency action because they lack legal effect, even if the agency will not

reconsider the statement itself. Cf. In re Murray Energy Corp., 788 F.3d at 336 (“Moreover,

even if EPA’s position on its legal authority is set in stone, the agency’s statements about its

legal authority—unconnected to any final rule or other final agency action—do not impose any

legal obligations or prohibitions on petitioners. Any such legal obligations or prohibitions will

be established, and any legal consequences for violating those obligations or prohibitions will be

imposed, only after EPA finalizes a rule.”).

Further, plaintiffs’ argument that an NOF is final agency action confuses the legal

standard for issuing such a notice. Section 5318A calls for the publication of an NOF if

“reasonable grounds exist for concluding that . . . 1 or more financial institutions operating

outside of the United States . . . is of primary money laundering concern.” 31 U.S.C.

§ 5318A(a)(1). A notice of finding—issued based on “reasonable grounds”—does not require or

imply that a final rule imposing a special measure will follow.9 It is thus analogous to the filing

of a complaint or the commencement of an enforcement proceeding—a classically non-final

agency action. See FTC v. Standard Oil Co., 449 U.S. 232, 242 (1980) (burden imposed on

plaintiff by the initiation of enforcement proceedings not sufficient to establish “final agency

action,” despite being “substantial,” because “it is different in kind and legal effect from the

burdens . . . considered to be final agency action”).

Finally, plaintiffs’ characterization of FinCEN as “a savvy dodger of review,” Opp. at 21,

is no substitute for a valid legal basis for seeking review of the NOF and NPRM. FinCEN is

9 Indeed, in other contexts, a showing based on “reasonable grounds” “must be grounded in more

than mere suspicion, but need not rise to the level of prima facie proof.” United States v. 8848 S.Commercial St., Chi., Ill., 757 F. Supp. 871, 879 (N.D. Ill. 1990) (construing a civil forfeiture

statute, 21 U.S.C. § 881).



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following the process set forth in section 5318A, which requires the agency to use rulemaking

procedures when imposing the fifth special measure. See 31 U.S.C. § 5318A(a)(2)(C). And the

APA has never entitled a plaintiff to review of every alleged injury from administrative action,

particularly where the alleged injury is a downstream consequence imposed by third parties

rather than the agency. Plaintiffs relegate their discussion of Murray Energy to a footnote,

shrugging off the D.C. Circuit’s most recent precedent on this issue by stating that they “are not

seeking to recover or avoid their costs in preparing for a final rule.” Opp. at 21 & n.8.

Obviously, plaintiffs are not complaining of precisely the same injury as the petitioners in

Murray Energy, but that hardly suffices to distinguish the case. In Murray Energy, as here, the

petitioners complained that “the Court will not be able to fully remedy [their] injury if we do not

hear the case at this time.” In re Murray Energy Corp., 788 F.3d at 335. But even if proposed

rules have immediate practical consequences, “that reality has never been a justification for

allowing courts to review proposed agency rules.” Id. As in Murray Energy, the plaintiffs’ APA

claims seeking review of non-final agency action should be dismissed. Further, plaintiffs are

incorrect in claiming that special measures imposed under section 5318A are otherwise

unreviewable; last summer’s decision in FBME Bank Ltd. v. Lew, No. 15-1270, 2015 U.S. Dist.

LEXIS 113687 (D.D.C. Aug. 27, 2015), demonstrates that judicial review can take place in the

context of a final rule, as the APA requires.

III. Plaintiffs Fail to State a Due Process Claim

Plaintiffs’ opposition brief does not salvage their due process claim. Plaintiffs have not

suffered a cognizable deprivation as the result of government action. Even if they had, their

tenuous connections to the United States do not entitle them to due process protections. And, in

any event, plaintiffs have been afforded ample process through FinCEN’s statutorily prescribed



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rulemaking proceedings. For each of these independent reasons, plaintiffs fail to state a due

process claim.

A. Plaintiffs cannot establish a deprivation by the government

Plaintiffs are unable to overcome the core defect of their due process claim—that there

has been no government action causing a deprivation. Even if BPA’s alleged deprivations could

be imputed to plaintiffs, there is no “sufficiently close nexus between the State and the

challenged action.” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 52 (1999) (citation

omitted). Despite attempting to conflate the independent actions of U.S. banks and the Andorran

government with those of FinCEN, plaintiffs cannot establish that such actions were the result of

“coercive power or . . . such significant encouragement, either overt or covert” by the U.S.

government, “that the choice must in law be deemed to be that of the State.” Id. (citation

omitted).

Plaintiffs’ assertion that the NPRM and the NOF alone coerced domestic banks and the

Andorran government to act is implausible on its face. Neither the NOF nor the NPRM required

or provided an incentive for any specific action by a third party. Indeed, the only action

suggested by the NPRM as to domestic actors was an invitation to submit comments on the

proposed rule, making clear that imposition of the fifth special measure was a “proposal” for the

future, not a current requirement.10

See Imposition of Special Measure Against Banca Privada

d’Andorra as a Financial Institution of Primary Money Laundering Concern, 80 Fed. Reg.

13,304, 13,307 (Mar. 13, 2015). The NOF itself does not suggest that third parties take any

10 Contrary to plaintiffs’ assertions, the NPRM did not “advise[]” U.S. banks to take any action

with regard to plaintiffs’ correspondent accounts. Opp. at 38 (citing Compl. ¶ 1). Rather, thecited “encourage[ment]” was directed only to “other countries.” 80 Fed. Reg. at 13,305. The

Court need not credit plaintiffs’ mischaracterization of the NPRM in its allegations at the motionto dismiss stage. See Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004) (public records are

subject to judicial notice on a motion to dismiss).



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particular action. Decisions made by domestic banks, while perhaps consistent with the findings

in the NOF and recommendation in the NPRM, cannot therefore be treated as the result of

coercion or instigation. See Vill. of Bensenville v. FAA, 457 F.3d 52, 64 (D.C. Cir. 2006)

(“‘Mere approval of or acquiescence in the initiatives of a private party is not sufficient to justify

holding the State responsible for those initiatives.’”) (quoting Blum v. Yaretsky, 457 U.S. 991,

1004 (1982)).11

That FinCEN “encourage[d] other countries to take similar action” in the NPRM, 80 Fed.

Reg. at 13,305, is insufficient to establish that the agency coerced the Andorran government to

initiate the resolution of BPA. This invitation, standing alone, is not the type of “significant

encouragement” necessary to treat a typical third-party actor as an arm of the United States. Am.

Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. at 52. Yet even if it were, a sovereign country is no

typical third-party actor, a distinction plaintiffs ignore. To inquire into whether the Andorran

government was essentially acting as a puppet of the United States would be contrary to the act

of state doctrine, as defendants pointed out in their opening brief. Nor have plaintiffs identified

any case where a foreign country’s actions were imputed to the United States for the purpose of

state-actor analysis. If it were even possible to make such an attribution, the level of coercion

must rise far above the limited “encourage[ment]” alleged here.12

Plaintiffs also argue that the NOF directly caused a reputational harm and thereby injured

their liberty interest in engaging in business. This argument fails because plaintiffs cannot meet

11 Even if the domestic banks’ actions could be imputed to the U.S. government, plaintiffs havenot articulated why they have a protectable property interest in having access to the U.S.

financial system. See Opp. at 31.

12 As set forth in more detail above, both U.S. banks and the Andorran government have their

own independent reasons for acting to deter and detect money-laundering activity. See supra at

5.



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the requirements for such a deprivation under D.C. Circuit case law and, even if they could, the

argument is premature. A procedural due process claim cannot hinge on a reputational injury

whose only practical consequences are inflicted by third parties. In General Electric v. Jackson,

610 F.3d 110 (D.C. Cir. 2010), the Court of Appeals held that a plaintiff’s claim that a particular

government action “harms the [plaintiff’s] reputation, and the market, in turn, devalues its stock,

brand, and credit rating,” and thus constituted a due process violation, was “foreclosed” by

Supreme Court precedent. Id. at 121 (citing Paul v. Davis, 424 U.S. 693 (1976)); see also

Siegert v. Gilley, 500 U.S. 226, 234 (1991) (“[S]o long as . . . damage flows from injury caused

by the defendant to a plaintiffs reputation,” plaintiff has not stated a constitutional injury). To

state a reputational due process claim under Paul, the plaintiff must establish two things: “First,

the government must be the source of the defamatory allegations. Second, the resulting ‘stigma’

must involve some tangible change of status vis-a-vis the government.” Doe v. U.S. Dep’t of

Justice, 753 F.2d 1092, 1108-09 (D.C. Cir. 1985). While the D.C. Circuit has recognized that a

procedural due process claim may lie where a government action “broadly precludes plaintiffs

from pursuing a chosen trade or business,” General Electric, 610 F.3d at 121 (citation omitted),

that line of authority is limited to cases involving lost government employment or government

contracting opportunities, see Mosrie v. Barry, 718 F.2d 1151, 1161 (D.C. Cir. 1983) (“The

harms suffered by appellant in this case do not meet the Paul v. Davis requirement of loss of a

government position or change in legal status.”) (emphasis added); Trifax Corp. v. District of

Columbia, 314 F.3d 641, 643 (D.C. Cir. 2003) (“Trifax claims to have suffered ‘broad

preclusion’ from government contracting”); Old Dominion Dairy Products, Inc. v. Sec’y of Def.,

631 F.2d 953, 963 (D.C. Cir. 1980) (plaintiff “lost two substantial contracts which it otherwise

would have received. This sudden loss of Government work effectively put Old Dominion out



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of business.”). The D.C. Circuit has never held that a plaintiff can proceed under the “broad

preclusion” portion of its “stigma-plus” test based entirely on the consequential effects of third-

party action—i.e., without showing a “tangible change of status vis-a-vis the government.” Doe,

753 F.2d at 1109. Such a holding would be in direct conflict with both General Electric and Paul

v. Davis. See Paul, 424 U.S. at 706 (“But the Court has never held that the mere defamation of

an individual . . . was sufficient to invoke the guarantees of procedural due process absent an

accompanying loss of government employment.”).

Moreover, as with plaintiffs’ claims generally, their reputational harm argument is

premature. Plaintiffs have sued while the government is in the midst of an ongoing process, the

result of which may end in a final rule or otherwise, and the reputational harms are alleged to

result from a notice of finding that is subject to being withdrawn or revised during the

rulemaking process. Even if the argument were not premature, at most the NOF affected BPA’s

reputation, and thereby its relationships, with the four U.S. banks with whom it had

correspondent banking relationships. See Compl. ¶ 39.13

The actions by the U.S. banks do not

cut off BPA’s international business. Indeed, plaintiffs claim that portions of BPA’s business

operations are still viable. Id. ¶ 46. Plaintiffs therefore cannot establish that the NOF had the

effect of largely precluding BPA from pursuing banking as a business. General Electric, 610

F.3d at 121.

B. Plaintiffs still lack a sufficiently pled constitutional presence

Plaintiffs attempt to establish the “substantial connections” to the United States

necessary to invoke constitutional due process protections via (1) their own alleged real property

13 The complaint does not allege whether BPA was also unable to establish new correspondent

banking relationships with other U.S. banks. U.S. banks remain free to establish correspondent

accounts with BPA. Nothing in the proposed rule precludes them from doing so.



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interests; and (2) BPA’s correspondent banking relationship and compliance with U.S. regulatory

requirements in maintaining its correspondent accounts. United States v. Verdugo-Urquidez,

494 U.S. 259, 270 (1990). Neither is sufficient.

As to plaintiffs’ own real property interests, as defendants pointed out in their opening

brief, the complaint does not plead sufficient details regarding plaintiffs’ “significant real

property assets” to permit them to claim the protection of the Due Process Clause. Compl. ¶ 41.

While plaintiffs need not catalogue every domestic property interest, their allegations should

make clear whether the identified property is related to the complained of deprivation, because as

discussed below, it is unlikely that owning unrelated property would entitle the owner to due

process protections in all respects. Plaintiffs have identified no case where such a vague

allegation was sufficient to establish “substantial connections” with the United States for the

purpose of due process analysis.14 Although plaintiffs now identify beneficial real property

holdings in Florida, see Opp. at 34 n.20, this information is not properly before the Court. “[I]t

is axiomatic that a plaintiff may not amend the complaint through facts first alleged in an

opposition brief.” Briscoe v. Costco Wholesale Corp., 61 F. Supp. 3d 78, 90 (D.D.C. 2014)

(citing Sloan v. Urban Title Servs., Inc., 689 F. Supp. 2d 94, 114 (D.D.C. 2010)).

14 Plaintiffs overstate the holding from 32 County Sovereignty Committee, in which the court

declined to find any entitlement to due process because those plaintiffs had failed to demonstratethat they possessed any controlling interest in property in the United States. 32 Cty. Sovereignty

Comm. v. Dep't of State, 292 F.3d 797, 799 (D.C. Cir. 2002). The court did not opine on whattype of property would be sufficient to confer due process rights nor did it discuss what would

comprise sufficient allegations as to that property. Similarly, the alleged property at issue in National Council of Resistance of Iran, an unidentified United States bank account, itself would

have been blocked had the plaintiffs been designed as “foreign terrorist organizations” andthereby was sufficient to support the plaintiffs’ due process claim. Nat’l Council of Resistance

of Iran, 251 F.3d at 204. The case does not stand for the proposition that any “colorableallegation” of United States property would be sufficient to support a due process claim as to

unrelated property. See also id. at 202 (“we are not undertaking to determine, as a generalmatter, how ‘substantial’ an alien’s connections with this country must be to merit the

protections of the Due Process Clause”).



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Even if the Court were to credit these additional facts, the Florida real estate is not a

sufficient “substantial connection” to give them due process rights with regard to the completely

unrelated alleged deprivations to BPA’s U.S. operations. Plaintiffs do not attempt to explain

why this unrelated property interest would meet the “functional approach” required. See

Boumediene v. Bush, 552 U.S. 723, 764 (2008). And plaintiffs’ view would lead to absurd

results, as foreign nationals could obtain expansive constitutional protections simply by

procuring an unrelated asset in the United States. Even the cases on which they rely make clear

that the Florida real estate does not entitle plaintiffs to due process rights writ large. See Nat’l

Council of Resistance of Iran v. Dep’t of State, 251 F.3d 192, 204 (D.C. Cir. 2001) (“a foreign

organization that acquires or holds property in this country may invoke the protections of the

Constitution when that property is placed in jeopardy by government intervention”) (emphasis

added). They have identified no case reaching the expansive conclusion they seek.15

Plaintiffs also claim the right to seek constitutional protections via the nominal party,

BPA. As set forth above, however, plaintiffs lack standing to raise claims on BPA’s behalf.

Even if BPA’s operations could be imputed to plaintiffs, they do not establish the “substantial

connection” necessary to entitle plaintiffs to constitutional protections. There are no allegations

that BPA has a physical presence in the United States, such as a branch or office. With respect

to BPA’s correspondent accounts, ownership of the funds in those accounts cannot automatically

be attributed to BPA, given that the funds in such accounts are generally presumed to belong to

15 Plaintiffs’ reliance on Kadi v. Geithner is misplaced. The court in Kadi stated that “[t]he D.C.Circuit has not explicitly addressed what criteria this Court should apply in considering whether

a foreign national residing outside the United States can satisfy the ‘substantial connection’ testto raise rights under the U.S. Constitution related to the blocking or freezing of his assets” and

ultimately declined to determine whether the plaintiff had met the substantial connection test because the matter could be resolved on other grounds. Kadi v. Geithner, 42 F. Supp. 3d 1, 25-

28 (D.D.C. 2012).



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the depositor. United States v. Union Bank For Sav. & Inv. (Jordan), 487 F.3d 8, 17 (1st Cir.

2007) (“[A]bsent an exception, section 981(k)(4)(B)(i)(I) places ownership in the hands of the

‘owner . . . of the funds that were deposited into [the foreign bank] at the time such funds were

deposited.’”). Plaintiffs assert that business transactions and compliance with U.S. regulatory

requirements establish BPA’s presence, but that argument is contrary to the law of this Circuit,

which requires actual presence or property. See 32 County Sovereignty Comm. v. Dep’t of

State, 292 F.3d 797, 799 (D.C. Cir. 2002) (“[a] foreign entity without property or presence in this

country has no constitutional rights”).16

Notably, the FBME court recently declined to determine

whether a plaintiff bank in a similar position as BPA was entitled to due process because the

“record” was “unclear” whether it had “sufficient presence or property in the United States” to

establish that foreign bank’s entitlement to constitutional protections. FBME Bank Ltd., 2015

U.S. Dist. LEXIS 113687, at *16.

Finally, plaintiffs’ citation to legislative history borders on the absurd. The quoted

section describes Congress’s view of how a court should treat “a moving party” where classified

information has been submitted as part of this regulatory scheme. H.R. Conf. Rep. 108-381, at

55. It refers only to potential due process issues related to any classified information should

FinCEN issue a final rule which is then challenged, and the report is not relevant in this matter,

where plaintiffs are challenging a proposed rule (and also lack standing to do so). The cited

report cannot reasonably be read to afford any new due process protections to parties who would

not otherwise be entitled to them. Indeed, to the extent that plaintiffs are relying on this passage

to assert that Congress considered the due process implications of this statutory scheme, in that

16 Indeed, its actions in complying with regulatory requirements were minimal—the submission

of names and addresses of BPA’s owners to its correspondent banks and the identity of an agentin the United States designated to receive process. Compl. ¶ 40. There was no significant

engagement with U.S. regulatory requirements.



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organizations deemed to present threats to national security under IEEPA and AEDPA. As

noted, plaintiffs’ response mistakenly treats the issuance of the NOF and NPRM as causing the

deprivation, but when properly viewed as the initial events in a notice and comment process,

plaintiffs cannot seriously argue that the process available to them compares unfavorably to

either IEEPA or FTO designations. Cf. FBME Bank Ltd., 2015 U.S. Dist. LEXIS 113687, at

*28 (“it is almost certainly true that FBME received substantially more process than any

organization that is designated an FTO under AEDPA”).17 Plaintiffs’ claims that the current

process is insufficient are thus unavailing.

To the extent that plaintiffs’ argument concerns their lack of access to the non-classified

record on which the NOF and NPRM were based, it is premature. There has been no final

agency action, and thus the administrative record is not yet required. See FinCEN Mem. at 33

n.16. Plaintiffs rely on the recent decision in FBME to assert that they were entitled to the

unclassified administrative record before the NPRM comment period expired. Yet a careful

reading of the FBME decision makes clear that such a conclusion would be premature in this

matter. First, in FBME, the court was reviewing a final rule, with its accompanying

deprivations, which is not the case here. Moreover, the FBME court carefully reviewed the

unclassified documents upon which FinCEN “relied” and identified particular relevant factual

information omitted from the NOF. Id. at *22-24. This analysis informed its decision that the

17 Plaintiffs argue that the national security concerns that underlie SDGT designations under

IEEPA are not present here. Yet the statutory scheme that sets forth the process that plaintiffs

have been afforded addresses extremely serious concerns. Specifically, in enacting Section 311,Congress noted that money laundering “provides the financial fuel that permits transnational

criminal enterprises to conduct and expand their operations” and that it is “critical to thefinancing of global terrorism and the provision of funds for terrorist attacks.” 31 U.S.C. § 5311

(note). Although plaintiffs assert that BPA’s actions are unrelated to such serious concerns, suchan argument is appropriate for a substantive review of any final rule that is issued; it does not

affect the adequacy of the process available under Section 311.



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Documents

REPLY IN SUPPORT OF MOTION TO DISMISS BY DEFENDANTS JACOB LEW, U.S. DEPARTMENT OF THE TREASURY, JENNIFER SHASKY CALVERY, AND THE FINANCIAL CRIMES ENFORCEMENT NETWORK_February 18, 2016