On April 23, 2014, the U.S. Court of Appeals for the Second Circuit reinstated the action brought by the European Community and its 26 member states against RJR Nabisco and related entities (collectively, “RJR”) for allegedly laundering drug money through the exchange of discounted euros and cigarettes. In the long-running case European Community v. RJR Nabisco, Inc., the Second Circuit applied and clarified the presumption against extraterritoriality of United States laws.

The European Community claims that Columbian and Russian criminal organizations smuggled illegal narcotics into Europe. The drugs were allegedly sold, producing revenue in euros, which the criminal organizations “laundered” by using money brokers in Europe to exchange the euros for the domestic currency of the criminal organizations’ home countries.  The money brokers then sold the euros to cigarette importers at a discounted rate, and the cigarette importers then used the euros to purchase RJR’s cigarettes from wholesalers or “cut-outs.” The wholesalers then purchased the cigarettes from RJR and shipped the cigarettes to the importers who purchased them. Finally, the money brokers used the funds derived from the cigarette importers to continue the laundering cycle.