The United States government has a little-known power to freeze money owned by people and companies in foreign countries.

Congress recently expanded the Department of Justice’s power to ask a court to restrain foreign assets. The new law is called the “Preserving Foreign Criminal Assets for Forfeiture Act of 2010.”

This law lets the Department of Justice go into a federal court in the United States and ask for an order that restrains assets that belong to someone in a foreign country. The government can do this, if the assets are the subject of a foreign proceeding to take them as a part of a criminal case. The statute says:

“To preserve the availability of property subject to civil or criminal forfeiture under foreign law, the Government may apply for, and the court may issue, a restraining order at any time before or after the initiation of forfeiture proceedings by a foreign nation.”

What this means, in essence, is that the Department of Justice can go into a federal court and ask for an order that prevents a person from having access to his money, without showing that the person did anything wrong, without showing that the money is related to any wrongdoing, and without presenting much evidence at all – as long as some foreign country somewhere in the world has started forfeiture proceedings on those assets.

As our world becomes more global, as money moves across borders more quickly, the Department of Justice’s power to reach for money involved in a foreign proceeding affects more and more people.

The courts have said that they are skeptical of this kind of assertion of power. Currently, there are cases challenging this statute and the way the Department of Justice thinks it should be used.

About a prior version of the law, the United States Court of Appeals for the District of Columbia Circuit said:

“So under the Government’s interpretation, a U.S. citizen’s assets could be frozen for years—without any meaningful substantive judicial review in a U.S. court—based merely on the request of a foreign official and the prospect that the property owner might one day be found guilty or liable in a foreign court.” Here is the court’s full opinion.

The right to challenge a government action that threatens to take away your ability to enjoy your property is fundamental to due process. These rights are threatened, though, by the government’s approach to its powers to freeze or restrain assets that are subject to forfeiture proceedings in foreign courts. The United States is deferring to a court in a different country to tell us when assets should be frozen.

Matt Kaiser has been involved in one of the first cases to challenge the Preserving Foreign Criminal Assets for Forfeiture Act of 2010, representing a client in a proceeding brought by the Department of Justice to freeze significant assets.

The Department of Justice will continue to bring these actions until the law is clear. To speak with an attorney about international asset forfeiture issues, please call (202) 640-2850.