“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,” Holder said in a statement. “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.”
The new limits underscore a major shift in the federal government’s use of civil asset forfeiture laws, which have allowed local, state and federal authorities to take billions from individuals over the past decade without proving that crimes have occurred.
In January, Holder barred local and state police from using federal law to seize cash and other property without warrants or criminal charges, unless federal authorities were directly involved in the case.
Those changes followed a Washington Post investigation last year that found that police nationwide have seized $2.5 billion in cash from almost 62,000 people since 2001 — without warrants or indictments. The money was forfeited through Justice’s Equitable Sharing Program. Thousands of people had to fight long legal battles to get some or all of their money back.
The policy guidance issued Tuesday focuses on IRS and Justice agents who made seizures relating to cases involving alleged “structuring,” the practice of intentionally limiting the size of bank transactions to avoid taxes or to hide ill-gotten funds. It is a felony offense to structure financial transactions.
Studies have found that enforcement efforts involving the seizure of bank accounts have often swept up criminals and innocent alike — including small-business owners who sometimes make multiple cash deposits for convenience and security rather than for illegal reasons.
A study by the Institute for Justice, a libertarian-leaning civil liberties group, found that from 2005 to 2012, the IRS used federal asset forfeiture law to take almost a quarter-billion dollars in more than 2,500 cases. In one-third of the cases the group examined, there was no allegation of any other criminal activity besides the allegation that someone had made transactions of less than $10,000, allegedly to evade federal reporting requirements.
In a statement, IJ lawyer Scott Bullock praised Holder’s move but said it does not go far enough because it “still leaves significant discretion to federal officials.”
“How effective the policy will be really depends on how it is applied in practice,” he said. “The ultimate solution must come from Congress to both ensure that innocent small-business owners do not have their lawfully-obtained funds taken and that these policy changes are made permanent through statute.”
Under the new policy, federal prosecutors must develop clear evidence of probable cause that a crime, other than simply structuring, has occurred. And before an account can be seized, a supervisor must approve the action.
A prosecutor may also ask a judge to issue a seizure warrant but only with the approval of a U.S. attorney or the chief of the Justice Department’s Asset Forfeiture and Money Laundering Section.
The change comes as part of an ongoing review of the federal asset forfeiture program. It “is intended to ensure that our investigative resources are appropriately and effectively allocated to address the most serious structuring offenses,” the policy directive said.