Posting for

Tuesday, August 25, 1998

by: Bert Rush

brush@firstam.com

FOREIGN TERRORIST ORGANIZATIONS/TERRORISTS/ESCROW AND CLOSING

President Clinton's announcement last week that the U.S. will vigorously seek to block assets of terrorist Osama bin Laden, and his associates, should cause us to re-visit the U.S. Department of Treasury requirements for blocking funds payable to "Foreign Terrorist Organizations."

The D.O.T. has not yet gone after any escrow or settlement company under its blocking edict, as far as we know, but with the recent escalation of terrorism directed against the U.S.--and the world's attention and suspicion now being focused on bin Laden--we should expect this D.O.T. program to have heightened priority in Washington. This means heightened risks for escrow and title operations (though no one expects bin Laden to have substantial assets here in the U.S.).

Bin Laden has not previously been on the D.O.T.'s list of Foreign Terrorist Organizations--until last week--because the feds didn't want him to know they were on to him. He's listed now--with various affiliated organizations and names--as of 8/21/98.

To view the latest D.O.T. list, go to the First American Employee Intranet/look for "Resources"/look for "Underwriting Resource Center"/look for "New Requirements re Blocking Funds of "Foreign Terrorist Organizations"/this will get you to my memo of 11/5/97--click on the link for "DOT Website"/look for "What's New." Note: When you search for the latest list of Foreign Terrorist Organizations, make sure you find one with a recent date. There was a list attached to my memo last November which sometimes pops up--it's not the latest.

Questions, comment, argument? Just press the "reply" button....

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Following up on last Tuesday's (8/25) posting, Keith Pearson (Glendale/L.A.) writes:

Have we seen these seizures in action? What form do they take? Are they like levies from the IRS or do SWAT teams comming flying through the doors. What defenses and problems if any have we seen?

I am not aware of any seizure under the Foreign Terrorist Organizations Regulations. If an escrow or closing company "blocked" funds held on account for a listed person or organization, and notified the Dept. of Treasury (DOT), I expect the company would then be told not to deal further with the funds without authorization from the DOT. The next step might be for the Dept. of Justice or U.S. Attorney to file a civil action to claim the funds. I'm not aware of any authority for direct seizure of such funds--unless provided by those statutes providing for government forfeiture of property used in the commission of, or acquired with proceeds derived from, crime.

If an escrow or closing company fails to block funds when blocking was required, I'd expect the Govt. to file a civil action to recover any fine claimed to be due. (There are also criminal sanctions available to punish those who knowingly support and assist terrorists.)

Don't know how to answer the "swat team" question. Due to the fact this is considered a matter of great danger to the public, I think government agencies are adopting a "shoot first, ask questions later" frame of mind. And, I think, this attitude is strongly supported by public opinion.

The situation is very unpredictable--so I think our people should be mindful of the blocking requirement, even if the possibility of these terrorists having substantial real property assets in the U.S. is remote.

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Frank Melchior (Iselin, NJ) writes:

I thought Rick was transferred to Denver, not Wyoming!

Reply: He probably had just looked at the latest DOT list and was venting. I looked at it the other day to see how many names they affiliated with Osama bin Laden--and they were spelling it "Usama." So who's right--the DOT or every newspaper in the country? And what if someone fails to block a million-dollar payment to "Osama" bin Laden? Oy.

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Rick Garlick (Golden/Denver) writes:

I reiterate my longstanding opinion that the only terrorist organization involved in these regulations is the United States government.

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Apparently Frank Melchior's comment about Wyoming stirred the lunatic fringe.

Bob Bailey (Casper, WY) writes:

Keep it up. You may think that Wyoming is out in the sticks but i'm watching you - all of you. baaaaaa.

Actually, Frank meant to call out Montana. Anyhow, Mike Kleese (Missoula, MT) writes:

While driving back from a claim inspection near Jordan, Montana (freeman/militia stand-off), I thought I passed a sign that read Rick Garlick for President. I'll take a picture next time.