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New DOJ Asset Seizure Memorandum
April 1, 2015On March 31, 2015, the Department of Justice announced that it had issued a new policy to restrict the use of asset forfeiture in structuring offenses. This shift in tactics was likely prompted by growing media reports of abuses that particularly victimized legitimate, small business owners who had made cash bank deposits in amounts under $10,000. Although the government's approach of seizing assets perceived to have been used in illegal banking transactions was anticipated as an effective pre-emptive method to hinder growing efforts to circumvent currency reporting and to further illegal money laundering, the uneven application of the seizures came off as heavy-handed and immune to reasonable appeals for a prompt release of seized funds.
Under the newly announced protocol, prior to the filing of criminal charges, DOJ will now limit the use of warrants permitting asset seizures and will impose a "probable cause" standard. As set forth in the DOJ Memorandum:
If no criminal charge has been filed and a prosecutor has not obtained the approval identified below, a prosecutor shall not move to seize structured funds unless there is probable cause that the structured funds were generated by unlawful activity or that the structured funds were intended for use in, or to conceal or promote, ongoing or anticipated unlawful activity. For these purposes, "unlawful activity" includes instances in which the investigation revealed no known legitimate source for the funds being structured. Also for these purposes, the term "anticipated unlawful activity" does not include future Title 26 offenses. The basis for linking the structured funds to additional unlawful activity must receive appropriate supervisory approval and be memorialized in the prosecutor's records.
An exception to the restriction on warrants is permitted when a U.S. Attorney or the Chief of the DOJ's Criminal Division/Asset Forfeiture and Money Laundering section personally determines that a proposed asset seizure is a compelling law enforcement interest. Among the reasons set forth in the Memorandum that would serve as a predicate for the exception;
The U.S. Attorney or Chief of AFMLS may grant approval if there is a compelling law enforcement reason to seek a warrant, including, but not limited to, reasons such as: serial evasion of the reporting or record keeping requirements; the causing of domestic financial institutions to file false or incomplete reports; and violations committed, or aided and abetted, by persons who are owners, officers, directors or employees of domestic financial institutions.
In apparent response to criticism about its prior seizure policy, DOJ will now require that a prosecutor promptly direct the return of funds by any seizing agency if a determination has been made that there is insufficient admissible evidence for any contemplated charges to prevail at civil or criminal trial. As set forth in the Memorandum:
There may be instances in which a prosecutor properly obtains a seizure warrant but subsequently determines that there is insufficient admissible evidence to prevail at either civil or criminal trial for violations of the structuring statute or another federal crime for which forfeiture of the seized assets is authorized. In such cases, within seven (7) days of reaching this conclusion, the prosecutor must direct the seizing agency to return the full amount of the seized money. Once directed, the seizing agency will promptly initiate the process to return the seized funds.
This new policy includes a 150-day deadline by which a prosecutor must file an indictment or a civil complaint against the seized funds. In situations where charges are settled, DOJ has promulgated a policy requiring a formal, written settlement agreement for structuring offenses.