Freezing Assets in the War on Terror: OFAC and the Fourth Amendment

Rebecca Kagan Sternhell, Fordham University

Abstract

In 2001, President Bush issued Executive Order 13224 declaring a state of national emergency and triggering an array of emergency powers. Chief among these powers was the International Emergency Economic Powers Act (“IEEPA”), which permits the Treasury Department’s Office of Foreign Asset Control (“OFAC”) to freeze the assets and accounts of suspected terrorists and their affiliates. Recently OFAC has gone after U.S. charities. Three US charities filed suit alleging Fourth Amendment violations. Each organization received a different judicial determination on the Fourth Amendment question. The paper discusses these three cases and demonstrates no consensus on the Fourth Amendment issue. There is currently no clear way to conceptualize OFAC’s blocking actions. Fourth Amendment challenges are a recent development with no real precedent. Though both are covered by the Fourth Amendment, pure seizures, absent searches, are a fairly unique circumstance. Given the import, size, and scope of the Terrorism Sanctions program, the law should be settled as to how to characterize OFAC’s freezing actions. In addition to the three cases, the paper discusses the history and jurisprudence of asset freezes and seizures, and concludes by finding that OFAC’s freezes of assets are Fourth Amendment seizures when carried out against U.S. Citizens and entities. All available exceptions to the warrant requirement are generally inapt, though may apply in specialized factual circumstances. In order to protect Constitutional rights some form of a warrant or interposition of the judiciary is necessary.