- The Washington Times - Tuesday, September 25, 2001

U.S. courts have long tolerated a presidential blank check to block money transfers and seize assets during national emergencies, but the power President Bush asserted yesterday to keep uncooperative foreign bankers out of American markets never has been tested.

"That is fairly unprecedented," said John Byrne, senior counsel of the American Bankers Association, a member since 1994 of the U.S. Treasury advisory group on bank secrecy and a specialist on money laundering.

Some European banks may be barred by law from the required tactics and whether those banks could be banned from U.S. business was the next question.

"I understood the White House is going to pursue it. From our vantage point and I've been here 20 years I don't see the power to make that stick in the context of this authority or any other authority," the banking lawyer said.

Other new powers asserted by the White House broadened coverage to people "associated with" designated terrorist groups and expanded the reach from Middle East terrorists to what the president calls global terrorist groups that use "nice-sounding, nongovernmental organizations as fronts."

"We will succeed in starving the terrorists of funding and shutting down the institutions that support or facilitate terrorism," Mr. Bush said.

Mr. Byrne said that if funds for the 27 individuals, supporters and associated organizations can be identified, banks would divert them into holding accounts.

He agreed with the president's statement that little terrorism money actually reaches these shores and questioned his authority to press foreign banks into the fray.

"We're putting banks and financial institutions around the world on notice. If they fail to help us by sharing information or freezing accounts, the Department of the Treasury now has the authority to freeze their bank's assets and transactions in the United States," Mr. Bush said.

Frozen-asset orders by American presidents have been applied and upheld by federal courts in conflicts involving Germany, Japan, Italy, Cuba, Libya, Iran, Yugoslavia, Iraq and Afghanistan among other nations.

And they were applied against Osama bin Laden without apparent effect by President Clinton after the 1998 terror bombings of American embassies in Tanzania and Kenya killed 263 persons and injured thousands.

In last winter's issue of the Minnesota Journal of Global Trade, researcher Alan Einisman called the use of economic sanctions against terrorists of bin Laden's ilk ineffective at best. "One could argue that fighting terrorism is much like fighting a neighborhood bully: You have to come at him fast and hard, tit for tat," Mr. Einisman said.

Presidential powers expand vastly under a proclamation of national emergency, as a bipartisan Senate committee noted in 1978 after a futile search for ways to restrict them.

Mr. Byrne said more than 50 U.S. banking groups joined a conference call at midafternoon to implement the major economic weapon in the president's declared war on terrorism.

He said bankers question the effectiveness of similar earlier orders, including the 1998 decision to block bin Laden funds, which he suggested are being transferred outside of banking channels.

"I'm not aware of any bin Laden funds that have been stopped," Mr. Byrne said. "A lot of the moneys that may or may not have been used in the World Trade Center plot were small amounts, below the radar screens."

Mr. Byrne said U.S. banks are cooperating within the law in efforts to find those accounts or others that may be held by so-called "sleeper" agents awaiting terror assignments.

"We will provide the information if we have accounts. We won't provide the records without a subpoena," he said.

The law authorizing yesterday's unusually broad freeze is the International Emergency Economic Powers Act, known as IEEPA, which replaced the "trading with the enemy act."

That IEEPA law as currently amended empowers presidents to "investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest."

From a banker's perspective, that requires a report to the government of any loans, letters of credit, checks, wire transfers, and even charitable donations to support terrorists. "We're fairly good at it if you give us a list," Mr. Byrne said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide