Forfeiture of Terrorist Assets Under the USA PATRIOT Act of 2001 Stefan D. Cassella Deputy Chief, AFMLS Criminal Division The USA PATRIOT Act (hereafter “Patriot Act”), Pub. L. 107-56, 115 Stat. 272, contains a number of provisions that may be used by federal law enforcement authorities to seize and forfeit the assets of terrorist organizations, assets that are derived from terrorist acts, and assets that are intended to be used to commit terrorist acts in the future. Some of the new provisions are specifically intended to be used in, and are limited to, the terrorism context. Others apply more generally, but will undoubtedly be used in terrorism cases. I. 18 U.S.C. § 981(a)(1)(G) Title 18 , United States Code, section 981 , is the general-purpose civil forfeiture statute applicable to most federal crimes. Among other things, it authorizes the forfeiture of property involved in money laundering cases (18 U.S.C. § 981(a)(1)(A)), property derived from and used to commit certain foreign crimes (18 U.S.C. § 981(a)(1)(B)), and the proceeds of any offense designated as a “specified unlawful activity” (18 U.S.C . § 981(a )(1)(C )). Section 806 of the Patriot Act added a new provision to section 981 that is obviously a response to September 11. Section 981(a)(1)(G) authorizes forfeiture of all assets belonging to anyone engaged in terrorism , any property affording any person a “source of influence” over a terrorist organization, and any property derived from or used to commit a terrorist act. This language is extraordinarily broad. Unlike the money laundering statute, which authorizes the forfeiture only of property “involved in” the money laundering offense (18 U.S.C. § 981(a)(1)(A)), or the drug statute, which authorizes forfeiture only of property derived from or used to commit the drug offense (21 U.S.C. § 881(a)), section 981(a)(1)(G) does not require any nexus between property and a terrorism offense. To the contrary, once the Government establishes that a person, entity, or organization is engaged in terrorism against the United States, its citizens or residents, or their property, the Government can seize and ultimately forfeit all assets, foreign or domestic, of the terrorist entity—whether those assets are connected to terrorism or not. The only parallel in federal law is to the Racketeer Influenced and Corrupt Organizations (RICO) statute, which permits the forfeiture of all interests a person has in a RICO enterprise or any property affording that person a source of influence over the enterprise, whether the forfeited property was tainted in any way by the racketeering activity or not. See 18 U.S.C. § 1963(a)(2). In fact, the “source of influence” language that appears in the RICO statute is repeated in section 981(a)(1)(G ). Enactment of section 981(a)(1)(G) was necessary because the law previously had no forfeiture provisions tailored to terrorism. A. Civil vs. Criminal forfeiture Section 981(a)(1)(G) appears in the general purpose civil forfeiture statute, but it is really both a civil and criminal forfeiture provision. That is because federal law now provides that any forfeiture that can be done as a civil forfeiture can also be done as a criminal forfeiture. See 28 U.S.C. § 2461(c). Thus, if the Government apprehends and prosecutes a terrorist, it can seek forfeiture of all assets in the criminal case under the new statute, provided that the act giving rise to the forfeiture occurred after October 21, 2001, when the new law took effect. But the true utility of section 98 1(a)( 1)(G ) is likely to be in the civil forfeiture context, because in civil forfeiture cases the Government can proceed against the assets even if it does not apprehend the defendant because he or she is dead or remains a fugitive from justice. B. Procedure for civil forfeiture In most respects, a forfeiture under section 981(a)(1)(G) will work just like any other civil forfeiture action under federal law. The Government can seize property based on probable cause. Generally the seizure must be pursuant to a warrant, but warrantless seizures are authorized in exigent circumstances. See Florida v. White, 526 U.S. 559, 119 S. Ct. 1555 (1999). But the seizure of property is only the beginning of the process. Seized property may be under Government control, but it still belongs to the property owner. See United States v. A Group of Islands, 185 F. Supp. 2d 117, 121 n.7, (D.P.R. 2001) (seizure may be based on probable cause to believe the property will ultimately be proved forfeitable, but it entails only taking possession and control; to become the owner of the property, i.e., to transfer title to the property to the United States, the Government must commence a forfeiture action). To convert a seizure into a forfeiture—that is, to take title to the property permanently away from the property owner and transfer it to the Government—the Government must commence a formal forfeiture action. The provisions of the Civil Asset Forfeiture Reform Act (CAFRA) of 2001 set forth the procedure for converting a seizure into a forfeiture. See 18 U.S.C. § 983. In short, the Government has 60 days from the date of the seizure to send notice of the forfeiture action to all interested parties (section 983(a)(1)). If no one files a claim challenging the forfeiture in 30 days (section 983(a)(2)), the Government can declare the property forfeited by default (19 U.S.C. § 1609). If someone does challenge the forfeiture, however, the Government has 90 days to return the property or to commence either a civil or criminal forfeiture action in federal court (section 983(a)(3)). All of that is standard civil forfeiture law. It would work the same way in a terrorism case as in any other case. In other words, if the Government seizes a terrorist’s assets under section 981(a)(1)(G), the case could be in federal court, before a jury in less than six months. The only concession Congress has made to the unique nature of terrorism cases concerns the procedure at trial. Under section 316 of the Patriot Act, if the case goes to trial under section 981(a)(1)(G), and the property involves the assets of “suspected international terrorists,” the normal burden of proof is reversed: Once the Government makes its initial showing of probable cause, the claimant has the burden of proving by a preponderance of the evidence that his or her property is not subject to confiscation. In almost all other forfeiture cases, of course, the Government has the burden of proving the forfeitability of the property . See 18 U.S.C. § 983(c). Moreover, in the forfeiture trial, hearsay is admissible if the evidence is reliable, and compliance with the normal Rules of Evidence “ may jeopardize the national security interests of the United States.” But these two exceptions aside, the forfeiture of terrorist assets under section 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. See 28 U.S.C. § 2465. C. Relationship to IEEPA For whatever reason, 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 Department of the Treasury has separate authority to freeze and confiscate terrorist assets under the International Emergency Economic Powers Act (IEEPA) that is specifically exempted from CAFRA and from virtually all of the other evidentiary and due process requirements of federal forfeiture law. See 18 U.S.C. § 983(i). Thus, all the stories in the media about the President freezing bank accounts of terrorists since September 11 have been IEEPA cases, not cases brought by the Department of Justice under section 9 81(a)(1 )(G). Under IEEPA, Treasury—that is, the Office of Foreign Asset Control (OFAC)—can freeze (i.e., seize) suspected terrorist assets indefinitely based on a presidential order. And 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. See section 316(a) of the Patriot Act. On the other hand, Treasury could decide to refer a case to the Department of Justice for formal forfeiture of the property under section 981(a)(1)(G). The Department of Justice stands ready to pursue any such case if it is 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 money laundering statutes. Under section 981(a)(1)(A), the Government can forfeit any property involved in a money laundering offense. That can be either “clean” or “dirty” property, as long as it is involved in the money laundering. See United States v. McGauley, 279 F.3d 62, 76 n.14 (1st Cir. 2002) (collecting cases and citing legislative history). The problem has always been that the money laundering statutes are “backward looking.” Most of them focus on what the crimimal is doing with the proceeds of a crime that has already been committed. See, e.g., 18 U.S.C. § 1956(a)(1)(B)(i) (concealing or disguising the proceeds of a prior crime). Terrorism cases, however, usually deal not with someone who is trying to hide the proceeds of a past crime, but 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 of them considerably. Under 18 U.S.C. § 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’s not new. What is new is that the Patriot Act greatly expanded the list of specified unlawful activities to include approximately 47 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. § 2332b(g)(5)(B), which has been incorporated into the RICO statute (18 U.S.C. § 1961(1)), which in turn is incorporated into the list of specified unlawful activities. See 18 U.S.C. § 1956(c)(7)(A). So here’s where this new authority will be used: If someone brings money not derived (as far as it is known) from any criminal offense into the United States with the intent to use it to commit one of the acts of terrorism listed in section 2332b(g)(5)(B), that is a section 1956(a)(2)(A) violation, and the money is immediately subject to civil or criminal forfeiture because it was involved in a money laundering offense. III. 18 U.S.C. § 1960 The other reverse money laundering statute is found in a newly-enacted subsection of 18 U.S.C. § 1960. Section 1960 was enacted in 1992 to make it a crime to conduct a money transmitting business without a license. It was little used because it was too hard to prove that a defendant knew that operating without a license was a crime. The Patriot Act amended section 1960 to allow the prosecution of a money remitter in three situations: • When he or she operates without a license, whether he or she knows that doing so is a crime or not; • When he or she operates in violation of the Treasury regulations on money transmitters; and • When he or she transfers money knowing that the funds being transmitted are derived from a criminal offense or are intended to be used for an unlawful purpose. Note that the third alternative does not require proof that the business was unlicensed. Someone who sends money for a living, knowing it came from a criminal act or that it is intended for a future criminal act, is guilty of an offense under section 1960. Note also the conjunction “or.” If the money remitter is sending money that he or she knows is intended to be used to commit a criminal act, he or she does not have to know—indeed, it is unnecessary 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, section 1956, the general money laundering statute, because section 1956 requires proof that the money is dirty and that the launderer intends to use it to commit another unlawful act. See 18 U.S.C. § 1956(a)(1)(A )(i). Moreover, the Patriot Act provides forfeiture authority for section 1960 violations. See 18 U.S.C. § 981(a)(1)(A). Money being transmitted for an unlawful purpose is subject to forfeiture as property involved in the section 1960 offense. The only problem is that section 1960 only applies to persons in the business of being money remitters. What is really needed is a domestic counterpart to section 1956(a)(2)(A) so that the Government can prosecute anyone engaged in reverse money laundering in the United States whether he or she is a money remitter or not, and whether the money crosses an international border or not. It appears that right now only the State of Florida has such a domestic reverse money laundering statute. IV. 18 U .S.C. § 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 in the United States (28 U.S.C. § 1355(b)), 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. § 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; nor does the foreign bank have standing to object to the forfeiture action. Only the customer who made the deposit of the forfeitable funds into the foreign bank has standing to contest the forfeiture. 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. This solves the problems that occur when a foreign bank objects to the forfeiture of funds in its correspondent account, claiming that the money belongs to the bank, not its customer, and raising the innocent owner defense. Because this will be controversial, however, forfeitures under section 981(k) require approval from the Department of Justice.. ABOUT THE AUTHOR Stefan D. Cassella is the Deputy Chief of the Asset Forfeiture and Money Laundering Section (AFMLS). He has been a prosecutor since 1979. He came to the Department of Justice in 1985 and has been involved in forfeiture and money laundering issues since 1989. He handles civil and criminal forfeiture cases, lectures at training conferences on many aspects of money laundering and forfeiture law, and is responsible for legal advice, policy, and legislative issues for the Department. He handled the criminal forfeiture of the assets of Bank of Credit and Commerce International, for which he received the John Marshall Award. He has published four law review articles on forfeiture and is the editor of Quick Release, the Department's forfeiture newsletter. From 1978-89, he served as Senior Counsel to the United States Senate Judiciary Committee, working directly for the committee Chairman, Senator Joseph Biden, Jr.. This article is an edited version of a presentation made by the author at the symposium on “Financial Aspects of the War on Terror” at Georgetown University Law Center on March 18, 2002.