Back in April 2021, we commented on the potential imbalance between the US and UK’s jurisdictional reach for financial crime offences (including insider trading).
We will now examine how one of the many welcome effects of a recent Supreme Court Judgment (specifically, El-Khouri (Appellant) v Government of the United States of America (Respondent) may be able to redress this balance.
Background
Back in April 2021, we wrote an article off the back of the recent extradition to the United States (“US”) of a trader accused of insider dealing.
At the time we noted that it was interesting that the US had requested extradition when according to the US indictment, the trader was “At all relevant times to this indictment …. A citizen of the United Kingdom, residing in London, England”.
We commented that this was not the first time that the US established jurisdiction over a UK citizen for conduct in the UK and against the backdrop of a closed UK Financial Conduct Authority (“FCA”) investigation.
We noted that in 2017, three FX traders were indicted in the US for conspiracy to manipulate the Spot Market. All three were UK citizens and in the UK at all material times. Similarly, they had all previously been subject to a UK agency investigation (this time by the Serious Fraud Office), which had been closed.
We then went on to consider the differing jurisdictional reach for various financial crime offences.
After conducting a transposition exercise, we noted that in converse circumstances (i.e. the UK was exploring whether it would have jurisdiction for insider dealing so as to be able to seek extradition from the US), the UK’s specific insider dealing legislation is more restrictive so as to not give jurisdiction to the UK in converse circumstances.
We concluded that there was an interesting question of why the US had, again, asserted jurisdiction in circumstances concerning a UK national and conduct in the UK and against the backdrop of a closed UK investigation, and whether there was an imbalance.
In the context of a similar factual background, the UK Supreme Court has just considered a similar issue and exercise, but in the context of the extradition dual-criminality test.
The resulting Supreme Court Judgment could not only have a profound effect on UK extradition proceedings, but also have the potential to redress any imbalance.
El-Khouri (Appellant) v Government of the United States of America (Respondent)
The above recent Supreme Court case involved an attempt by the US to extradite Mr El-Khouri, a dual UK/Lebanese national living in the UK.
Mr El-Khouri’s extradition was sought for various offences of securities fraud, wire fraud, fraud in connection with a tender offer and conspiracy to commit such offences.
The facts alleged by the United States pointed to insider dealing in a conspiracy involving four individuals and payments, including for a New York hotel room for one of the conspirators.
Some conduct had occurred in the UK, however, the UK FCA, after conducting their own investigation, concluded that there was insufficient evidence to prosecute Mr El-Khouri, including due to evidential weaknesses.
Clarification – extra-territorial POCA effect and dual criminality
The Judgment has provoked extensive legal analysis on the basis of two confirmations.
The first is to confirm the scope of POCA’s extra-territorial effect, so that the acquisition, use or possession of the proceeds of criminal conduct must occur in the UK. A previous decision, which suggested that POCA had extra-territorial effect (on the basis that money was withdrawn from a Spanish Bank), was therefore wrongly decided.
The second is to re-clarify the dual criminality test. In doing so, the Supreme Court, in the context of examining the extradition dual criminality test, conducted a transposition exercise, ultimately concluding that the conduct did not constitute an extradition offence.
In conducting this exercise, the Supreme Court noted that Mr El-Khouri was not within the US at the time he is alleged to have committed any act, the dealing did not occur on a US regulated market, and the professional intermediary was not within the US when the dealing occurred.
As such, the Supreme Court held that dual criminality was not established, the conduct did not constitute an extradition offence and, ultimately, did not order extradition.
What does all this mean?
Aside from the interesting legal clarifications, the background to the Supreme Court case was another example of the US exercising jurisdictional reach against the backdrop of conduct occurring in the UK, which the UK authorities, for whatever reason, had decided not to pursue.
We have already identified potential imbalances between the UK and US’s jurisdictional reach for financial crime offences, and one of the many welcome effects of this Supreme Court Judgment could be to re-dress any imbalance going forwards.
How Gherson can help
Those who fear that they may be subject to extradition and even INTERPOL measures, including a Red Notice, should take heed.
Indeed, Gherson Solicitors continue to receive requests for expert advice and assistance from those who fear they may have outstanding financial issues arising. That advice tackles:
- How to best approach a possible INTERPOL red notice;
- Preparing for potential criminal proceedings / an extradition request;
- Preparing for a situation where a civil matter or commercial dispute could be used to initiate bogus criminal proceedings; and
- Exploring the possibility of instigating civil litigation proceedings to recover any misappropriated assets.
Gherson have previously written a series of blogs designed to assist those who fear they might be subject to INTERPOL measures (including a Red Notice):
- INTERPOL and Red Notice Challenges
- How to Remove an INTERPOL Red Notice
- INTERPOL Red Notices and Extradition
- How do I know if I am subject to an INTERPOL Red Notice.
Updated: 20 February 2025
Gherson’s regulatory, white-collar and investigations team are highly experienced in providing assistance on what you can do if your bank freezes or closes your account. This includes assisting you in submitting a request under data protection legislation, otherwise known as a Data Subject Access Request, to ascertain what information banks and other financial institutions may be holding on you and their decision-making, and then analysing the response and assisting with any appropriate challenge.
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The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
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