DATELINE: June 16, 2009, Chicago
Mainstream charities have been upset since President George Bush (43) first began his efforts to identify and shut down charities that finance terrorist activities. Everyone acknowledges that some charities have been used as fronts to finance terrorism. Nobody disputes the need to shut those charities down.
What has troubled many U.S. charitable organizations that make foreign grants, provide disaster relief, and provide aid to third world nations has been the...
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opaque rules that have come out of the Treasury’s Office of Foreign Asset Control (OFAC), the government agency charged with policing terrorist abuses of charities. The rules are draconian. OFAC has promulgated voluntary best practices for charities to follow, but these practices do not provide a safe harbor for legitimate charities that inadvertently finance terrorist activity after undertaking the recommended due diligence. Everyone involved can still end up in prison even though there was no criminal intent. It is a strict liability regime. Representatives of the mainstream community have tried to reason with OFAC, but their pleas have fallen on deaf ears. Tough is the watchword.
We have long contended that the overreaching rules crafted by the Treasury and OFAC will only come under close scrutiny when officials from a charity with a household name are criminally prosecuted under the regime that the Bush Administration put in place. Maybe the organization will be a disaster relief organization that must deal with village elders in remote areas of the world in order to provide disaster relief following a tsunamis or an earthquake. Or it might be the Catholic Church or other Christian-based faith organization and its missionary efforts. Or it might be a large foundation providing medical care or supplies to a third world population.
The Treasury envisions something akin to background checks on the people these charities must deal with. Background checks? That is an easy requirement to impose from an air-conditioned office in Washington, D.C. It isn’t so easy to comply with when trying to distribute drugs in a remote area in Central Asia hit by an earthquake. The only way to get the drugs to the sick and injured may be through a local official who speaks Urdu. Maybe he is a terrorist, maybe he isn’t. There is no way of knowing. Yet, the official can get aid to those in need. What’s a charity to do?
Most in the mainstream community have come to accept the status quo.
The ACLU has now spoken out, giving the charitable sector new ammunition. Their megaphone is entitled Blocking Faith, Freezing Charity: Chilling Muslim Charitable Giving in the “War on Terrorism Financing, a 166-page report, which forcefully concludes:
The counterterrorism legal framework is inherently vulnerable to mistake and abuse, and charities run the risk of irreversible harm on the basis of unsubstantiated evidence and without even basic due process protections.
The ACLU’s report lays out the arguments that will be used when officials from a mainstream charity become ensnared in OFAC’s existing rules. The report states:
The laws prohibiting material support for terrorism contain deeply troubling constitutional flaws. Because the material support statutes impose punishment without regard for the intent or character of the support provided, these statutes punish wholly innocent assistance to arbitrarily blacklisted individuals and organizations, undermine legitimate humanitarian efforts, and can be used to prosecute innocent donors who intend to support only lawful activity through religious practice, humanitarian aid, speech, or association. The government has argued that those who provide support to designated organizations can run afoul of the law even if they oppose the unlawful activities of the designated group, intend their support to be used only for humanitarian purposes, and take precautions to ensure that their support is indeed used for these purposes.
The report points out the risk that all of us face as a result of overbroad laws. It then details how these laws have disproportionately affected Muslim legitimate charities. It is clear that the federal government's policy have had an adverse affect on legitimate charitable activity by Muslims in the United States, as well as a chilling affect on religious practices by many U.S. Muslims. The report is based on 120 interviews, including 115 interviews with Muslim community leaders and American Muslims directly affected by the U.S. government’s policies regarding Muslim charities and Muslim charitable donors.
The ACLU report makes dozens of recommendations, including that:
Executive Order 13224 be repealed—this is the order that specially designates terrorist organizations.
Watch lists be reviewed every three months.
Limits be set on how long funds can be frozen.
The Privacy and Civil Liberties Oversight Board be adequately equipped. This board oversees the Treasury’s Terrorist Financing and Tracking Program.
The FBI, Department of Justice Joint Terrorism Task Force, and other federal agencies cease intimidation tactics.
The Treasury develop a process for releasing frozen funds.
OFAC withdraw its Voluntary Best Practices.
We will be interested to see whether the Exempt Organizations Committee of the ABA Tax Section follows up on the report.
Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, any advice (but none is intended) relating to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.
| THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
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