US Federal Appeals Court gives RICO statute extra-territorial bite in transnational litigation

In a milestone ruling last week giving extra-territorial application to the federal Racketeer Influence and Corrupt Organization Act (RICO), a Second Circuit panel has revived a massive civil RICO action brought a dozen years ago by the EU and twenty-six of its member states against R.J. Reynolds Tobacco and related entities for their role in an alleged global money-laundering enterprise involving claims of drug and cigarette smuggling.  A district court judge had dismissed the action three years ago after concluding that the RICO statute had no extra-territorial application.  The Second Circuit's decision comes more than two years after the appeal was argued.  Managers of legal and operational risk within financial institutions will wish to consider the implications of this decision, which is analysed more fully in our bulletin.