Legitimate charities snared in terror net

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Foreign charities might think twice before attempting to transfer aid money through American banks after what happened to at least two European-based organizations.

On three separate occasions, the two charitable groups had funds seized under U.S. anti-terrorism laws even though neither is accused of any terrorist connections. While most of the money was returned, some is still being held without explanation.

U.S. authorities seized a $17,870 payment en route from the Swedish Trade Union LO-TCO to an education project in Liberia in March 2006, and impounded two transactions involving Norwegian Church Aid totaling about $70,000 in 2003 and 2004.

On all three occasions, the charities were advised by U.S. banks that the money was being held because the groups might be on a watch list maintained by the U.S. Treasury Department's Office of Foreign Asset Control (OFAC).

OFAC maintains a list of designated persons and organizations suspected of funding terrorism. The assets of any person or group on this list are to be blocked until they make changes or present evidence that they are not linked to terrorism.

Both groups denied any connection to terrorism and a careful examination of the OFAC lists, which are publicly available on the Treasury Department's Web site, showed that neither was ever listed.

Candice Pratsch, a public-affairs specialist for terrorism and financial intelligence at OFAC, said the agency does not impound funds without proper grounds.

"If OFAC has frozen funds, then we have determined that the individual was engaging in activity that falls under one of the executive orders," she said.

"If they aren't designated, we wouldn't have blocked their assets. If a charity was designated and later delisted because they cut their ties to illicit activity, then we would unfreeze the blocked assets," she said.

Both organizations say they were not notified of the seizures by OFAC or the banks, which responded only when asked, but found out the money was missing when contacted by the intended recipients.

LO-TCO said its money was released to the intended Liberian bank after about two months, but only after its Swedish bank vouched for the union's reputation as an established international nongovernmental organization, or NGO.

U.S. authorities have been less helpful when it comes to the Norwegian Church Aid. The first transaction was confiscated in 2003 but not released until two years later. The second, seized in 2004, has yet to be returned.

"The first transaction was going to sponsor an American professor for an AIDS conference in Cuba. The money was confiscated in early 2003 but not returned until late 2005," said Eigil Schander-Larsen, the financial director of Norwegian Church Aid.

"The second transaction [intended for a YMCA branch in Burma] was confiscated in 2004 and, even though we have sent in the paperwork OFAC requires both by fax and PDF file, we still haven't heard anything. I sent the last reminder in January 2007," he said.

Mr. Schander-Larsen said the $7,000 involved in the latter transaction was "peanut money," but that it is "a lot of money" to the YMCA in Burma.