Forfeiture of terrorist assets under the USA Patriot Act of 2001

Law and Policy in International Business, Fall 2002 by Cassella, Stefan D

These two exceptions aside, the forfeiture of terrorist assets under [sec] 981(a)(1)(G) would proceed along a very short timetable, would likely involve a full-blown jury trial if contested, and could result in the payment of attorneys fees to the claimant if the Government fails to prevail.19

C. Relationship to IEEPA

For a variety of reasons, there have been few instances since September 11 in which the Government has sought to seize or forfeit terrorist assets under the new statute. The fact is that the Treasury Department has separate authority to freeze and confiscate terrorist assets under the International Emergency Economic Powers Act (IEEPA), which is specifically exempted from CAFRA and from virtually all of the other evidentiary and due process requirements of federal forfeiture law.20 Therefore, since September 11, 2001, virtually all of the press reports concerning the freezing of terrorist-related bank accounts have been IEEPA cases, not cases brought by the Justice Department under [sec] 981(a)(1)(G).

Under IEEPA, the Office of Foreign Asset Control (OFAC) of the Treasury Department can freeze (i.e., seize) suspected terrorist assets indefinitely based on a presidential order. Furthermore, if Treasury ultimately decides to convert its blocking order into a forfeiture (or "confiscation," which is the same thing), it would not be bound by any of the CAFRA procedures, except for the right of the property owner to contest the forfeiture by filing a claim in federal court.21

On the other hand, Treasury could decide to refer a case to the Department of Justice for formal forfeiture of the property under [sec] 981(a)(1)(G). The Justice Department stands ready to pursue any such cases that are referred.

II. FORFEITURE OF PROPERTY INTENDED TO BE USED TO COMMIT TERRORISM

There are some other provisions in the Patriot Act that are actually much more likely to be used to confiscate assets from terrorists. The key is to understand the interrelationship between the asset forfeiture and the money laundering statutes.

Under [sec] 981(a)(1)(A), the United States can forfeit any property involved in a money laundering offense. That property can be either "clean" or "dirty," as long as it is involved in the money laundering.22 The problem has always been that U.S. money laundering statutes are "backward looking." Most of them focus on what the criminal is doing with the proceeds of a crime that has already been committed.23 Terrorism cases, however, usually do not involve someone who is trying to hide the proceeds of a past crime, but rather someone who is moving money into or through the United States with the intent to use it to commit a crime-a terrorist act-in the future. This is called "reverse money laundering."

Only two federal money laundering statutes address reverse money laundering, but the Patriot Act has expanded both statutes considerably. Under 18 U.S.C. [sec] 1956(a)(2)(A), it is an offense for anyone to bring any money-tainted or untainted-into the United States for the purpose of using it to commit any "specified unlawful activity." That is not new. What is new is that the Patriot Act greatly expanded the list of "specified unlawful activities" to include approximately forty-seven offenses generally associated with terrorism, such as assassination, attack with biological weapons, or sabotage of a nuclear facility. The complete list is in 18 U.S.C. [sec] 2332b(g)(5)(B), which has been incorporated into the RICO statute,24 which in turn is incorporated into the list of "specified unlawful activities."25