USA PATRIOT Act and Re-granting Compliance

Background on Counter-Terrorism Measures

The threat of terrorism is a concern shared around the globe. Nonprofits and grantmakers of all types are committed to ensuring that funds do not go to support violence and/or terrorist activities, and recognize that increased vigilance is justified.

Soon after the terrorist attacks of September 11, 2001, President George W. Bush declared a national emergency and issued Executive Order 13224, “Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism.” The following month, Congress passed and the President signed into law the USA PATRIOT Act (“Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001”).

The Executive Order freezes all property and interests in property of certain “persons” (both individuals and organizations) identified as terrorists or otherwise associated with terrorism. The Executive Order also prohibits any transactions involving such persons or their property or property interests. Prohibited transactions include “any contribution of funds, goods or services to, or for the benefit of, [specifically listed persons].” In addition to its ban on transactions with specifically listed persons, the Executive Order prohibits transactions with, and freezes assets of, unnamed persons who “assist in, sponsor, or provide financial, material or technological support for, financial or other service to or in support of, such acts of terrorism or [listed persons]” or are “otherwise associated with” specifically listed persons.

Title 18 of the U.S. Code already included criminal sanctions for persons who provide material or financial support for terrorism and for foreign terrorist organizations (FTOs) in particular. The USA PATRIOT Act supplements these existing provisions, enhancing criminal penalties and expanding jurisdiction over the crime of providing support for terrorism. The provisions of Title 18, as amended by the USA PATRIOT Act, include “persons” (including, again, both individuals and organizations) known or suspected to be engaged in terrorism. Further, the relevant provisions of Title 18, as amended by the USA PATRIOT Act, impose fines and terms of imprisonment of up to 15 years for any entity that provides material support or resources knowing or intending that they be used in terrorist acts or by FTOs. Title 18 also provides a specific civil cause of action against those who violate the criminal prohibitions against providing support for terrorism.

“Persons” or “listed persons” are designated on watch lists of individuals and organizations issued by the U.S. government, the European Union, the United Nations, and other governments and/or governmental bodies. The U.S. government lists have been consolidated and are being maintained by the Office of Foreign Assets Control (OFAC) at the Department of the Treasury. This list is typically referred to as the “OFAC SDN” list (“SDN” refers to “specially designated nationals and blocked persons”). All of these lists can be found online.

The Council on Foundations has posted a Handbook on Counter-Terrorism Measures: What U.S. Nonprofits and Grantmakers Need to Know on its website. The handbook is an excellent resource, written in plain language, on the laws, regulations and enforcement measures put in place in the post-September 11, 2001, environment. Please review this resource for additional information.