Justice Department Curbs Use of Asset Forfeiture to Seize Bank Accounts

Practice funnels hundreds of millions of dollars a year to police departments

Items seized by the US Marshals in 2009 / AP
March 31, 2015

U.S. Attorney General Eric Holder announced Tuesday that the Justice Department will restrict the use of civil asset forfeiture laws to seize bank accounts, the latest in a series of moves by the Justice Department to curb the controversial practice of asset forfeiture.

Holder said in a statement that the Justice Department would only use asset forfeiture to seize bank accounts when a defendant is charged with a crime, or in cases where a prosecutor can develop probable cause of other criminal activity or prove there is a compelling law enforcement interest.

The use of asset forfeiture by the Internal Revenue Service and the Justice Department came under scrutiny after several news reports highlighted how it was used to seize the bank accounts of small business owners, solely on the suspicion that they were making deposits smaller than $10,000 to evade federal reporting requirements—what are known as "structuring" violations.

report by the Institute for Justice, a libertarian-leaning public interest law firm, found that the IRS used asset forfeiture to seize nearly a quarter of a billion dollars in more than 2,500 cases between 2005 and 2012. However, in one-third of those cases, there were no allegations of any criminal activity besides suspicion of structuring violations.

"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," said Holder. "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. And as we continue our comprehensive review of the Asset Forfeiture Program, we will stay focused on deterring criminal activity, assisting victims of wrongdoing and defending the rights of our citizens."

However, in a statement to the Washington Post, Scott Bullock, an attorney for the Institute for Justice, said the new policy "still leaves significant discretion to federal officials."

"How effective the policy will be really depends on how it is applied in practice," Bullock 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."

Tuesday’s announcement is the latest move by the Justice Department to limit its asset forfeiture program, which has ballooned over the last three decades and P to local and state police departments.

In January, facing pressure from Congress, Holder announced that the Justice Department would curb the ability of local and state police to use federal funds for asset forfeiture without criminal charges.

The moves come after several years of news investigations that revealed the widespread use of asset forfeiture by local, state, and federal law enforcement to seize citizens’ property—cash, cars, guns, and even houses—often without ever charging them with a crime.

Civil asset forfeiture laws were created to disrupt organized criminal activity, specifically drug trafficking, but civil rights advocates say they are also used to take property without due process from ordinary Americans.