U.S.

Cautiously Begins to Seize Millions in Foreign Banks Page 1 of 3

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nytimes.corn

May 30,2003

U.S. Cautiously Begins to Seize Millions in Foreign Banks

ByERICLICHTBLAU

w ASHINGTON, May 29 — The Justice Department has begun using its expanded counterterrorism powers to seize
millions of dollars from foreign banks that do business in the United States, creating tensions with the State
Department and some allies.

Law enforcement officials say the tool has proven invaluable in seizing ill-gotten money that criminals hide overseas and
that was once out of the government's reach. Under the counterterrorism measures approved by Congress after the Sept. 11
attacks, prosecutors are not even required to trace the money back to the target of an investigation.

Officials at the State Department, however, have raised concerns over the practice — in part because most of the seizures
have involved fraud and money-laundering investigations that are unrelated to terrorism.

State Department officials worry "that this might be seen by other countries as arbitrary or trying to extra-territorially impose
our laws" under the guise of fighting terrorism, said a Bush administration official who demanded anonymity. Diplomats
from several nations, including Switzerland, have voiced private objections, officials said.

The Justice Department has seized at least 15 foreign-based bank accounts in the United States in recent months,
confiscating what prosecutors say they believe to be tainted money belonging to overseas banks in Israel, Oman, Taiwan,
India, Belize and elsewhere, according to law enforcement officials who spoke on condition of anonymity. Other seizures
are also being considered, officials said.

Justice Department officials acknowledged the diplomatic problems that can be created by seizing money from foreign
banks, and they said they have sought to use the new power sparingly after considering all other legal options.

The authority to seize ill-gotten foreign funds "is a very powerful tool and one that can affect our international
relationships," said Bryan Sierra, a spokesman for the Justice Department.

Mr. Sierra said that to protect the law enforcement relationships the United States has developed with governments around
the world, the Justice Department "scrutinizes prosecutors' use of this provision before it is exercised."

The Justice Department has sent out guidance to prosecutors around the country about how to use the new power and has
reached an informal understanding with the State Department to consult more extensively with officials there before seizing
foreign money. State Department officials had complained that the Justice Department hafo kept them out of the loop in some
cases.

"This is a process of last resort," said a senior law enforcement official. American diplomats "are worried about it, and we
understand that, which is why we want to use this judiciously," said the official.

The State Department declined to comment on the issue. But a department official who spoke on condition o anonymity
acknowledged that there was still the potential for abuse in foreign seizures, despite the Justice Department's pledges to
consider diplomatic issues in its decisions.

"From a diplomatic point of view, we've got concerns," the official said. "We're the ones who have to ensure diplomatic
relations, and this complicates that."

Traditionally in money laundering and terror financing cases, federal authorities have worked through international law

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