ACLU Testifies Before House On Anti-Terrorism Financing Laws

May 26, 2010 12:00 am

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WASHINGTON – At a hearing before a House Committee on Financial Services subcommittee today, the American Civil Liberties Union testified about the need for greater transparency and due process in the Treasury Department’s enforcement of anti-terrorism financing laws and its effect on charitable organizations. The Subcommittee on Oversight and Investigations hearing was aimed at examining how anti-terrorist financing laws impact legitimate and lawful charities.

“Unfortunately, at a time when humanitarian aid is needed the most, the Treasury Department’s capricious, arbitrary and 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,” said Michael German, ACLU Policy Counsel and former FBI Agent in his testimony. “It is Congress’ obligation and duty to investigate and evaluate the Treasury Department’s anti-terrorism financing efforts to ensure they are fairly and effectively targeting those entities that specifically intend to support illegal activities of terrorist organizations. Congress must also ensure that a system is put into place that will provide transparency and due process while allowing legitimate aid and services to flow unimpeded.”

The International Emergency Economic Powers Act (IEEPA), passed by Congress in 1977, clarified and limited the president’s power to impose economic sanctions on “any foreign country or a national thereof” during times of national crisis. However, shortly after 9/11, President George W. Bush invoked his authority under IEEPA to issue an executive order which designated 27 organizations and individuals as “specially designated global terrorists” (SDGTs), and authorized the secretary of the treasury and the secretary of state to name more organizations to the SDGT list. The USA Patriot Act further amended IEEPA to allow the government to block or freeze an entity’s assets even without a designation, by simply opening an investigation into whether it should be designated.

IEEPA does not specify any standard of suspicion necessary to designate a charity as a terrorist organization and does not 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.

The ACLU is asking Congress to promote greater transparency and accountability in Treasury Department anti-terrorism financing enforcement. Specifically, Congress should reform the statutory framework for designation of SDGTs under IEEPA to ensure full due process protections and enact a statute for the seizure of assets of suspected SDGTs that complies with the Fourth Amendment.

“Our Constitution requires precision in the process of distinguishing between confederates of terrorist groups who seek to facilitate their unlawful aims and individuals and organizations whose legitimate First Amendment expression brings them into association with such groups,” said Jennifer Turner, a researcher with the ACLU Human Rights Program and author of the ACLU report Blocking Faith, Freezing Charity. “We are dealing with an unconstitutionally overbroad framework which gives the Treasury Department practically unfettered authority to shutter charities using secret evidence, without independent oversight, probable cause, or effective due process protections to protect against error and abuse. Not only that, it is clear that the federal government is unequally enforcing terrorism financing laws. The government’s markedly different treatment of for-profit organizations that have allegedly violated terrorism financing laws demonstrates this unequal enforcement.”

Earlier this month, a federal court ruled that Treasury Department’s freezing of a charity’s assets was unconstitutional and that in order to comply with the Constitution, Congress must fix the law to require a warrant be obtained based upon probable cause 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 ruling came in a lawsuit filed in November 2008 by the ACLU, the ACLU of Ohio and several civil rights attorneys on behalf of KindHearts for Charitable Humanitarian Development, Inc., an Ohio-based charity. The U.S. Treasury Department’s Office of Foreign Assets Control froze KindHearts’ assets four years ago without a warrant, notice or a hearing, based simply on the assertion that OFAC was investigating whether the charity should be designated as an SDGT.

More information about the ACLU’s lawsuit is available online at:

To read the ACLU’s statement submitted to the subcommittee, go to:

The ACLU’s report on charitable giving, “Blocking Faith, Freezing Charity” is available at:

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