A recent ruling which overturned OFAC's freezing the assets of a charitable organization that was allegedly funding terrorist operations has made a lot of news in the sanctions world. Judge James G. Carr ruled on August 18, 2009 that the charity was denied due process because the government did not show probable cause and did not obtain a warrant. The Treasury Department has yet to release a direct comment on the ruling.

The U.S. Treasury's Office of Foreign Asset Control has long enforced U.S. economic sanctions by requiring financial institutions to freeze the assets of groups and individuals designated by the office. An Executive Order (#13224) issued shortly after September 11, 2001 expanded OFAC's scope to include those entities under investigation but not yet designated as a Global Terrorist.

The Treasury Department, based on prior comments, sees the order as a necessary tool to prevent the flight of funds outside U.S. jurisdiction upon the start of an investigation. The targeted individuals and organizations, including KindHearts for Charitable Humanitarian Development, Inc. — the charity at the middle of the recent ruling, have a different view. By preventing access to the funds they believe that the U.S. government has effectively shut them down.

Regardless of the long-term implications of the ruling, organizations that fall under OFAC's jurisdiction are still responsible for compliance with the publicly-listed sanctions until they are amended. The stakes remain high and no one can afford to be out of compliance.