Academic journal article William and Mary Law Review

High Alert: The Government's War on the Financing of Terrorism and Its Implications for Donors, Domestic Charitable Organizations, and Global Philanthropy

Academic journal article William and Mary Law Review

High Alert: The Government's War on the Financing of Terrorism and Its Implications for Donors, Domestic Charitable Organizations, and Global Philanthropy

Article excerpt

TABLE OF CONTENTS

INTRODUCTION
I. ECONOMIC SANCTIONS--FREEZING ASSETS AND
   BLOCKING TRANSACTIONS
   A. Background
      1. Statutory Authority for Economic Sanctions
      2. Seven Decades of Reliance on TWEA
         and IEEPA Powers
   B. Executive Order 13,224
   C. Outcomes
      1. Background
      2. Foreign Terrorist Organizations and SDGTs
      3. Blocked Assets
      4. Cases Involving Blocked Assets of
         Domestic [section] 501(c)(3) Organizations
         a. Global Relief Foundation, Inc
         b. The Holy Land Foundation for Relief
            and Development
         c. Benevolence International Foundation, Inc.
         d. Summary
   D. Permanent Civil Asset Forfeiture
II. FEDERAL CRIMINAL SANCTIONS
   A. Background
   B. Anti-Money Laundering Initiatives
      1. The Virginia-Based SAAR Network
      2. Sami Amin Al-Arian
   C. Prohibition on the Provision of Material Support to
      Terrorists and Terrorist Organizations
      Under 18 U.S.C. [subsections] 2339A and 2339B
      1. Background
      2. Constitutional Challenges
      3. Implications for Donors and [section] 501(c)(3)
         Organizations
         a. Section 501(c)(3) Organizations as "Financial
            Institutions" for Purposes of 18 U.S.C. [section] 2339B--31
            U.S.C. [section] 5312(a)(2)(Z)
         b. Section 501(c)(3) Organizations as "Financial
            Institutions" for Purposes of 18 U.S.C. [section]
            2339B--Treasury's Voluntary Best Practices
            Guidelines May Portend the Future
   D. Unlawful and Willful Provision or Collection of
      Funds to Carry Out Terrorist Acts
III. SUSPENSION OF DESIGNATED ORGANIZATION'S
   TAX-EXEMPT STATUS
IV. PRIVATE CIVIL ACTIONS
V. DUE DILIGENCE
   A. Due Diligence by Members of Governing
      Bodies of [section] 501(c)(3) Organizations
   B. Due Diligence by Donors
CONCLUSION

ABSTRACT

Within days after the September 11 terrorist attacks, the U.S. government extended its already existing commitment to combat terrorism. President Bush declared a financial war on terrorism, with the aim of depriving terrorists of their necessary financial support. He issued Executive Order 13,224, which ordered the blocking of assets of specially designated global terrorists. (1) Congress enacted legislation that not only fortified previously existing criminal and civil laws, but also added new ones for use in combating terrorists and terrorism. The Bush Administration dedicated resources to existing and newly created governmental structures that would be responsible for enforcing these laws and for waging the financial war on terrorism. This enhanced legal and structural arsenal contains multiple means by which the U.S. government, as well as citizens injured by activities of foreign terrorists, can pursue economic or criminal sanctions against terrorists and their private sponsors, including individuals, as well as foreign nongovernmental organizations, domestic charitable organizations, and their governing bodies.

Awareness of this greatly expanded potential exposure to liability, and even criminal sanctions, has already engendered unforeseen side effects. Some well-intentioned donors reportedly now are reticent to make charitable contributions to domestic charitable organizations. Law-abiding Muslim charities have documented a decline in contributions received, and charitable organizations are struggling to maintain their pre-September 11 levels of commitment to global philanthropy. As the financial war on terrorism evolves and the arsenal of weapons is strengthened, the government's successes not only may starve terrorists financially, but also may have the unfortunate and unintentional consequence of significantly reducing resources committed to legitimate global philanthropy. Such a result, ironically, would contribute to fundamentalists' and radical terrorists' goal of disrupting globalism, which, if otherwise uninterrupted, could help to foster civil liberties and to achieve social and economic security and prosperity abroad that might diminish the intrinsic potency of terrorist groups and could lessen much of their appeal to outsiders. …

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