We previously reported that the Internal Revenue Service had been criticized for its controversial, yet legal, practice of seizing bank accounts when the account holder is suspected of engaging in “structuring.” “Structuring” refers to the practice of depositing (or withdrawing) funds from a bank account in amounts of less than $10,000, in order to avoid triggering the cash reporting requirement. In response, the IRS announced last fall a major policy change to ensure that the government’s civil forfeiture powers are not abused. In particular, the IRS said it would no longer seek seizure and forfeiture of accounts unless the funds in question were generated by illegal activity or there were exceptional circumstances justifying the exercise of forfeiture
On the heels of the IRS decision to limit its asset forfeiture efforts in this area, the Attorney General recently announced the Justice Department would similarly restrict its forfeiture policy with regard to structuring offenses. In a press release entitled “Attorney General Restricts Use of Asset Forfeiture in Structuring Offenses,” the DOJ announced the following:
As part of the Department of Justice’s comprehensive, ongoing review of the asset forfeiture program, Attorney General Eric Holder today issued a policy focusing the use of asset forfeiture authorities on the most serious illegal banking transactions, restricting civil or criminal forfeiture seizures for structuring until after a defendant has been criminally charged or has been found to have engaged in additional criminal activity, in most cases.
“With this new policy, the Department of Justice is taking action to ensure that we are allocating our resources to address the most serious offenses,” said Attorney General Holder. “Appropriate use of asset forfeiture law allows the Justice Department to safeguard the integrity, security and stability of our nation’s financial system while protecting the civil liberties of all Americans. And as we continue our comprehensive review of the Asset Forfeiture Program, we will stay focused on deterring criminal activity, assisting victims of wrongdoing and defending the rights of our citizens.”
Structuring generally occurs when, instead of conducting a single transaction in currency in an amount that would require a report to be filed or record made by a domestic financial institution, the violator conducts a series of currency transactions, willfully keeping each individual transaction at an amount below applicable thresholds to evade reporting or recording. In addition to being a stand-alone offense, structuring is a crime that often occurs in connection with other criminal activity.
The new Justice Department policy provides as follows:
Under the new policy, in the absence of criminal charges, judicially authorized warrants to seize bank accounts involved in structuring can only be obtained if the prosecutor first develops probable cause of additional federal criminal activity and that determination is approved by a supervisor. Otherwise, a prosecutor may ask a judge to issue a seizure warrant only if either the U.S. Attorney or the Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section personally determines that seizure would serve a compelling law enforcement interest.
In addition, the new policy imposes important protections after a seizure has taken place. The policy requires a prosecutor to promptly direct a seizing agency to return funds if the prosecutor determines that there is insufficient admissible evidence to prevail in a criminal or civil trial. The policy also imposes a 150-day deadline to file a criminal indictment or civil complaint against the seized funds, or otherwise directs a return of the full amount of the seized funds. Finally, the policy requires a formal, written settlement agreement vetted by a federal prosecutor for settlements of structuring offenses.
This new policy is the most recent result of the department’s ongoing review of the Asset Forfeiture Program to ensure that asset forfeiture – a critical law enforcement tool – can continue to be used to appropriately take the profits out of crime and return assets to victims, all while safeguarding civil liberties.
As part of the new policy announcement, the Attorney General also announced the release of an accompanying “Attorney General’s Memorandum and the Structuring Policy Directive.”
The press release noted that the policy was developed by the Asset Forfeiture and Money Laundering Section of the Criminal Division and the Attorney General’s Advisory Committee of U.S. Attorneys, and that the new policy applies to all Department of Justice attorneys.