Extraterritoriality in Financial Regulation
The aftermath of the financial crisis has seen a resurgence in the use of extraterritorial jurisdiction as a means to respond to the transnational activities of banks and financial actors in general. Although this has raised some controversy, it is important to remember that extraterritoriality is a longstanding and accepted principle in the prudential regulation of banks. The problematic part of extraterritorial jurisdiction regards other regulatory fields, especially U.S. sanctions law (e.g. BNP Paribas), where jurisdiction has been claimed on the sole basis of the use of U.S. dollars in the transaction. Whereas this so-called “correspondent account jurisdiction” was part of a number of settlements, it has been tested and affirmed in a recent case before a U.S. court.
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