Forfeiture of terrorist assets under the USA Patriot Act of 2001

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

Note also the conjunction "or." If the money remitter is sending money that he knows is intended to be used to commit a criminal act, neither does he need to know, nor is it necessary to prove that the money was derived from an unlawful source. The act of sending "clean" money with the intent to commit any unlawful act is sufficient. This is obviously a better law enforcement tool than, say, [sec] 1956, the general money laundering statute, because [sec] 1956 requires proof that the money is dirty and that the launderer intends to use it to commit another unlawful act.26

Moreover, the Patriot Act gives the Government forfeiture authority for [sec] 1960 violations.27 The only problem is that [sec] 1960 only applies to persons in the business of remitting money. What the Government really needs is a domestic counterpart to [sec] 1956(a)(2)(A) so that it can prosecute anyone engaged in reverse money laundering in the United States whether he is a money remitter or not, and whether or not the money crosses an international border. Currently, it appears that only the State of Florida has such a domestic reverse money laundering statute.

IV. 18 U.S.C. [sec] 981(k)

Finally, there is one other new tool relating to asset forfeiture in the Patriot Act that is worth mentioning. Historically, it has been very difficult for the United States to recover forfeitable property that has been deposited into a foreign bank. The federal courts have jurisdiction to enter forfeiture orders against funds in foreign banks if the act giving rise to the forfeiture occurred here,28 but the forfeiture still requires the cooperation of the foreign government. Sometimes that cooperation is forthcoming, and sometimes it is not.

Congress addressed this in the Patriot Act by enacting a new provision at 18 U.S.C. [sec] 981(k). Under that statute, if the Government can show that forfeitable property was deposited into an account at a foreign bank, the Government can now recover the property by filing a civil forfeiture action against the equivalent amount of money that is found in any correspondent account of the foreign bank that is located in the United States. It is not necessary to trace the money in the correspondent account to the foreign deposit. Furthermore, the foreign bank does not have standing to object to the forfeiture action. Only the customer who deposited the forfeitable funds into the foreign bank has standing to contest the forfeiture.

For example, if the United States learns that the assets of an international terrorist are on deposit in a bank on a Pacific island, and that bank has a correspondent account at a bank in New York, the Government may effectively seize the terrorist's assets by bringing a civil forfeiture action under [sec] 981(k) against the equivalent sum in the correspondent account of the foreign bank in New York.

The theory is that when the U.S. forfeiture action results in the forfeiture of a given sum of money from the correspondent account of the foreign bank, the bank will then debit the customer's account abroad, leaving the bank in a wash situation and depriving the foreign customer of the funds that have been forfeited to the United States. Before [sec] 981(k) was enacted this would have been impractical because the foreign bank would have had the right to object to the forfeiture of funds in its correspondent account, claiming that the money belongs to it, not its customer, and raising the innocent owner defense. Because this will be controversial, however, forfeitures under [sec] 981(k) require approval from Justice Department headquarters.