When a nonprofit organization (NPO) is listed by the U.S. government as a supporter of terrorism its assets within U.S. jurisdiction are generally frozen – or “blocked.” In order to contest the listing NPOs may need to access funds to pay for legal representation. Since December 2010 the Department of Treasury’s sanctions regulations https://www.gpo.gov/fdsys/pkg/FR-2010-12-07/html/2010-30520.htm permit NPOs and other entities and individuals to obtain free legal services and in some cases, to arrange payment for lawyers without first obtaining a license.
The regulation covers legal representation for groups or people listed under EO 12947 (1995), listing designations for those engaged in violence that threatens the Middle East peace process, EO 13224 (2001), which lists Specially Designated Global Terrorists and Foreign Terrorist Organizations listed by the Secretary of State. The rule can be found in Volume 75 Page 75904 of the Federal Register and in 31 of the Code of Federal Regulations Parts 594, 595, and 597.
No license from Treasury’s Office of Foreign Assets Control (OFAC) is needed to obtain or pay for legal advice in two situations:
The types of cases that can take advantage of this rule are as follows:
If the legal issue does not fall into these categories, a specific license is still required for payment of attorneys. For information on applying for a specific license see here.
The two approved payment methods are:
Legal payments from sources outside the U.S.
The rules allow representation by a “a U.S. person that is an attorney, law from or legal services organization…” when the funds originate outside the U.S., provided that the attorney provide Treasury’s Office of Foreign Assets Control (OFAC) with a letter of engagement or intent to engage that specifies the services to be performed, signed by the client. All funds must come from the client’s sources outside the U.S.
The attorneys working under this regulation must submit quarterly reports to OFAC that identify the sources of the funds, the amounts given, the names of consultants such as expert witnesses or investigators, and a general description of the services provided.
Legal payment from a legal defense fund
The regulations allow attorneys to create legal defense funds in a U.S. financial institution. Before payment can be made the following information must be submitted to OFAC:
Any funds left over at the end of the case or legal representation become the property of the listed group and are blocked unless a license authorizing their release is issued.