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Congress Must Rein in Anti-Terrorism Financing Laws

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May 27, 2010

Yesterday, ACLU Policy Counsel and former FBI agent Mike German testified before a House Financial Services subcommittee about anti-terrorism financing laws and their impact on legitimate and lawful charities. Mike spoke about the need for greater transparency and due process in the Treasury Department’s enforcement of anti-terrorism financing laws against charities, and how these policies are blocking legitimate humanitarian aid to those in need.

The ACLU’s report, Blocking Faith, Freezing Charity: Chilling Muslim Charitable Giving in the “War on Terror Financing, which documents the effect of U.S. government actions on American charities and their chilling effect on American Muslims’ practice of their religion through charitable giving, was submitted into the official Congressional record for the hearing by subcommittee Chairman Rep. Dennis Moore. (Check out a short ACLU video about this issue here.)

The ACLU testimony specifically asks Congress to reform the statutory framework for designation of terrorist groups under the law to ensure full due process and to comply with the Fourth Amendment in order to protect charities from mistaken or discriminatory enforcement. Because the Treasury Department has extremely broad authority to close charities on the basis of secret evidence and without a hearing or meaningful judicial review, congressional oversight of Treasury’s actions is critical. The ACLU asked Congress yesterday to thoroughly investigate and evaluate the Treasury Department’s anti-terrorism financing efforts.

The courts have begun to evaluate the Treasury Department’s actions, and it is time for Congress to do the same. Earlier this month, in a lawsuit filed by the ACLU on behalf of KindHearts for Charitable Humanitarian Development, Inc., an Ohio-based charity, a federal court ruled that the Treasury Department’s freezing of KindHearts’ assets in 2006 was unconstitutional and that in order to comply with the Constitution, Congress must fix the law to require a warrant based upon probable cause be obtained before taking such action. The court also found that the Treasury Department’s failure to give the charity notice of the basis for freezing its assets violated the Constitution by preventing the charity from being able to meaningfully respond to the freeze. The U.S. Treasury froze KindHearts’ assets without a warrant, notice or a hearing, based simply on the assertion that the charity was being investigated as to whether or not it should be designated as an SDGT. Four years later, KindHearts has not been designated, but the charity still remains frozen by the Treasury Department and out of business.

Shortly after 9/11, President George W. Bush invoked authority under the International Emergency Economic Powers Act (IEEPA), a law passed by Congress in 1977, which outlined the president’s power to impose economic sanctions on foreign countries or individuals during times of national crisis. Bush’s Treasury Department abused this power to designate eight American charities as supporters of terrorism, effectively shutting them down without notice or hearing. The Patriot Act further expanded the executive branch’s already overbroad authority, allowing the government to block or freeze an entity’s assets — even without designating the organization as terrorist — simply by opening an investigation into whether it should be designated. Troublingly, IEEPA does not specify any standard of suspicion necessary to designate a charity as a terrorist organization, nor does it require notice or a meaningful opportunity to contest the allegations. No criminal charges ever need to be filed in order to effectively shut a charity down for good, and the charity need never be told what evidence or allegations led to its demise, so charities are unable to defend themselves against the Treasury Department’s allegations.

At a time when humanitarian aid is most needed, the Treasury Department’s discriminatory enforcement of overbroad U.S. anti-terrorism financing laws has made it far more difficult for nonprofit organizations to provide critical aid and services. We are calling on Congress to put into place a system that will provide transparency and due process, while allowing legitimate aid and services to flow unimpeded. We hope that Congress will fulfill its duty and investigate U.S. anti-terrorism financing efforts to ensure they are fairly and effectively targeting entities that specifically intend to support illegal activities of terrorist organizations.

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