Both houses of Congress have now approved S. 1612, a bill that expands penalties for violations of economic sanctions against countries like Iran and designated terrorist organizations. The bill also expands the scope of prohibited activity to include vaguely defined conspiracy and aiding and abetting language that could lead to unpredictable results for the unwary. While penalty increases were needed to address violations by companies like Chiquita, which paid a designated terrorist organization for protection in Colombia, passage of the bill without review of how the economic sanctions laws negatively impact humanitarian aid, development and human rights programs could prolong what is seen as a bad situation. OMB Watch is among the nonprofits that are calling for congressional oversight of the difficulties charities face. S. 1612, the International Emergency Economic Powers Enhancement Act (IEEPA), was approved by the House on Oct. 2, after the being approved by the Senate in June. It increases fines for violations of economic embargoes declared by the president, from $50,000 to $250,000, or twice the amount of the illegal transaction. It also expands criminal penalties for intentional violations or for helping support violations by others with fines up to $1 million and prison terms up to 20 years. The definition of criminal activity is expanded from a prohibition on willful or attempted violations to include any conspiracy to violate the law or aiding or abetting an unlawful act. These terms are undefined and could criminalize behavior far removed from the actual illegal act, such as charitable relief provided in disaster areas where terrorist groups operate or bankers with an indirect role in a financial transaction. The bill went through Congress relatively quickly. It passed the Senate after a hearing that only included Bush administration officials, and there was no hearing before the House Foreign Affairs Committee. OMB Watch wrote to the House Democratic leadership asking for a delay on the vote on S. 1612 until the Foreign Affairs Committee could investigate how the IEEPA has affected the charitable sector. The appeal noted that use of IEEPA to prevent terrorist financing through charities may have made sense as a short-term, emergency solution in 2001 but is not a good long-term strategy. Although the bill passed, the call for oversight continues. Key questions for Congress include:

• How has Treasury treated charities under Bush's Patriot Act executive orders?
• Why does Treasury refuse to meet with charities about ways to release frozen funds for genuine charitable programs?
• Why is there no independent review of designation of charities?
• Why do charities get shut down, but companies like Chiquita pay fines that are small relative to their assets?

The potential for penalties for unintentional violations could be a problem for both charities and businesses. In a floor statement before the House voted on the bill, Rep. Donald Manzullo (R-IL) expressed concern that small businesses may be assessed penalties for "unintentional, accidental or inadvertent violations." No changes were made to provide protection in these situations. Instead, the Departments of Commerce and Treasury sent Manzullo assurances that they will not abuse their new authority. In the long term, more formal protection may be needed, as information about errors in evidence used to shut down charities has come to light in the recent Holy Land Foundation trial in Texas. Background on IEEPA Charities and other entities are subject to asset seizure under Patriot Act amendments to IEEPA, which give the president discretion to declare an emergency for "any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." President Bush used these powers on Sept. 24, 2001, granting the Treasury Department (among other powers) the ability to freeze the assets of all persons the Secretary of the Treasury determined ". . . assist in, sponsor, or provide financial, material, or technological support for . . . such acts of (foreign) terrorism . . . or to be otherwise associated with those persons listed in the Annex to this order." (Executive Order 13224, 66 Fed. Reg. 49079 (2001), at Sec. 1(d)(i), (ii).) The threshold for asset seizure is low. Under the Patriot Act revisions to IEEPA, the Treasury Department can freeze an organization's assets pending an investigation into possible associations with a designated terrorist group.