DISTRICT COURT IN NEW YORK ORDERS TWO U.S. BANKS TO TURN OVER ACCOUNTS OF CHINESE COMPANY CARIBBEAN GALAXY AND POLITICALLY EXPOSED PERSONS

A United States Magistrate Judge in the Southern District of New York (SDNY) has entered a REPORT AND RECOMMENDATION granting a §1782 Application to Conduct Discovery for Use in Foreign Proceedings, as to STANDARD CHARTERED BANK and BANK OF NEW YORK MELLON, regarding the Chinese company, CARIBBEAN GALAXY and TIMOTHY HARRIS, ex SKN Prime Minister. Readers who have been following the developments in Saint Kitts & Nevis will recall that another Federal Court, the Southern District of Florida, has previously entered a similar order permitting Discovery regarding bank accounts, for defensive use in Defamation cases pending in that Caribbean state.  See In Re: Application for Authorization to Conduct Discovery for Use in Foreign Proceedings, et al, Case No.: 24-CV-20492-RKA  (SDFL 2024). 

In the instant case, the Court, after first determining that the movant met the statutory requirements, went on to find that the banks from whom Discovery was being sought were not parties to the underlying foreign proceeding, that the foreign tribunal would be receptive to the evidence, and that the request was not duly intrusive nor burdensome, granting the Application on November 1, 2024, in a nineteen-page Report supported by extensive citations to relevant case law.  The judge also recommended that a protective order, preventing the  applicants from using the Discovery obtained, "was not proper, " as any intended use in another forum, such as the Florida RICO  case, could be dealt with by the Middle District at that time.

From a purely compliance viewpoint, we question whether sufficient transaction monitoring occurred, regarding of the Chinese-owned company, CARIBBEAN GALAXY,  former Saint Kitts Prime Minister TIMOTHY  HARRIS, and other individuals, all of whom are, by definition, High-Risk and/or Politically Exposed Persons (PEPS). Some of these accounts reportedly transferred extremely large amounts of US Dollars to and from China and the Caribbean, involving Citizenship by Investment (CBI) applications, upon which Standard Chartered and BNY Mellon compliance officers would have been unable to confirm had been previously subject to Source of Funds and Source of Wealth of inquiries, regarding the Applicants' wire transfers. Were any Suspicious Activity Reports (SARS) filed, and if so, how did US regulatory agencies and law enforcement allow these high-risk transactions to transit the US financial structure for years, without subjecting them to enforcement action? The Discovery which will now be obtained in this proceeding may answer some of those questions.