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- Year: 2008
- Country: Transnational
- Language: English
- Document Type: Publication
- Topic: Counterterrorism and Money Laundering,Defending Civil Society,Regional/Global Overviews
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Counter-Terrorism, Civil Liberties,
and the Enabling Legal and Political Environment for Civil Society:
A Comparative International Analysis of “War on Terror” States
Winner of the ICNL-Cordaid Civil Liberties Prize
Professor of Law, Faculty Scholar,
and Lauridsen Family Fello w, University of Iowa
President-elect, International So ciety for Third Sector Research
This manuscript was submitted for consideration for the ICNL-Cordaid Civil Liberties Prize in
January 2008. More information regarding the prize and winners can be found at
This paper focuses on the legal and political environment for civil society, with a
focus on civil liberties, in an era in which counter-terrorism policy and law has severely
challenged civil society and civil liberties in some countries. The ways in which counter-
terrorism law and policy affect civil soci ety can differ dramatically by country and
region. So this paper provides a comparative international analysis of the impact of
counter-terrorism policy and law on civil society in a number of countries in which the
“war on terror” is being fought, emphasizing impacts on th e enabling environment for
civil society such as laws, regulations, policies and practice influenc ing the existence,
structure, activities and vibr ancy of civil society.
I address these impacts in the United St ates, the United Kingdom, and Australia,
with some comparative reference in the conclusions to Canada, Netherlands and the
European Union. Certainly other countries and regions could and should be discussed,
but limited space forces a focus on some of the countries in which the “war on terror” has
been waged most vigorously and where the impact of counter-terrorism law and policy
on civil society has been most widely contested. 1
There are significant differences in th e way that the nexus between counter-
terrorism law and policy and civil is regulated in the U.K., the U.S., and Australia. The
British approach has relied significantly on charity regulators as statutory-based core
partners in the battle against terrorism, ofte n as “first responders” in situations where
charities are allegedly tied to terrorism or te rrorist finance. The American approach to
shutting off terrorist finance from nonprofits la rgely sidesteps charity regulators in favor
of direct action by prosecutors, a function of both prosecution- and homeland security-led
counter-terrorism measures in the United St ates and the bifurcated nature of nonprofit
regulation under the American federal structure. Australia is still developing its
approaches, and showing indica tions of using both models.
The paper begins from the important premise that measures used to monitor,
investigate, restrict, prosecute or otherwise affect charities in the goal of restricting
terrorist financing should also seek to maintain the autonomy and vibrancy that
characterizes the charitable sector in democratic societies, and that serious efforts must be
made to balance society’s interests in freedom from terrorism with society’s interests in a
vibrant, autonomous and power ful charitable sector.
These are not the “state’s” interests distinguished from the “charitable sector’s”
interests; our interests in combating terrorism and in preserving and enhancing the vital
role of the charitable sector are interests th at states and charitable sectors share, as do
other forces in society.
1 I have greatly benefited from responses by participants to earlier presentations and papers on these
issues at the Centre for Civil Society Studies, London School of Economics (June 2007); Association for
Research on Nonprofit Organizations and Voluntary Action (ARNOVA) (November 2007);
Government of Canada Commission of Enquiry into the Investigation of the Bombing of Air India Flight
182 (Major Commission) (November 2007), and other venues.
The impact of counter-terrorism law and policy on civil society and the enabling
environment for it have been the subject of important early, 2 as well as recent 3 work by
Barnett Baron, Alan Fowler, Jude Howell and colleagues, Joe McMahon, David Moore,
Kasturi Sen, and other commen tators, and of crucial work by organizations that have
focused intensively on these issues.
4 I seek to build upon that work here, as well as some
of my earlier work in this area, 5 to discuss the growing conflict between governments and
2 The growing academic and practice literature on government-charitable sector relations and anti-
terrorism includes Richard Moyers, A Shocking Silence on Muslim Charities , Chronicle of Philanthropy
October 2002; Barnett Baron, Deterring Donors: Anti-Terrorist Financing Rules and American
Philanthropy , International Journal of Not-for-Profit Law
6(2), 1-32 (2004); Alan Fowler, Assessing the
Impact of Counter-Terrorism Measures for Nongovernment Organizations (INTRAC, 2004, at
www.intrac.org); InterAction, Handbook on Counter-Terrorism Measures: What U.S. Nonprofits and
Grantmakers Need to Know (2004); Kumi Naidoo, Coming Clean: Civil Society Organisations at a Time of
Global Uncertainty , International Journal of Not-for-Profit Law
6(3): 1-3 (2004); Alan Fowler, Aid
Architecture: Reflections on NGDO Future s and the Emergence of Counter-Terrorism , INTRAC
Occasional Papers Series No. 45, Oxford, 2005; Teresa Odendahl, Foundations and their Role in Anti-
terrorism Enforcement: Findings from a Recent Study and Implications for the Future , Georgetown
University, June 2005.
3 Alan Fowler, Counter Terrorism Measures, Development, and Civil Society , Powerpoint presentation
given at the INTRAC workshop in the Netherlands, January 2006 (www.intrac.org); Blake Bromley, The
Post 9/11 Paradigm of International Philanthropy , Paper presented to the International Society for Third
Sector Research Seventh International Conference, Bangkok (July 2006); Terrence Carter, The Impact of
Anti-Terrorism Legislation on Charities: The Shadow of the Law (Carters, Toronto, 2006); Civicus, Impact
of Counterterrorism Measures on Civil Society (Civicus, Southdale (South Africa), 2006); Jude Howell,
The Global War on Terror, D evelopment and Civil Society, Journal of International Development
135 (2006); Mark Sidel, More Secure, Less Free? Antiterrorism Policy and Civil Liberties after September
11 (University of Michigan Press, 2004, revised ed. 2006); C.R.M. Versteegh, Terrorism and the
Vulnerability of Charitable Organisations , Paper presented to the International Society for Third Sector
Research Seventh International Conference, Bangkok (July 2006); Jude Howell and colleagues, The
Backlash against Civil Society in the Wake of the Long War on Terror (LSE Centre for Civil Society,
2006); LSE Centre for Civil Society, Aid, Security and Civil Society in the Post-911 Context: Briefing
Report of an International Workshop (June 2007); Nancy Billica, Philanthropy, Counterterrorism and
Global Civil Society Activism (June 2007).
4 They include Cordaid, INTRAC, the Interna tional Center for Not-for-Profit Law (ICNL), CIVICUS,
and other organizations. For the important work of these organizations on the issues discussed here, see,
e.g., Alan Fowler, Counter Terrorism Measures, Development, and Civil Society , Presentation given at the
INTRAC workshop in the Netherlands, January 2006 (www.intrac.org); INTRAC/VANI Overview on South
Asia CTM Workshop , June 2006; INTRAC, Overview Report on CTM Workshops: Redefining Development
for National Security – Implications for NGOs and CSOs (2007) (www.intrac.org); Kasturi Sen, The War
on Terror and the Onslaught on Development (INTRAC, October 2007, www.intrac.org); Joseph
McMahon, Developments in the Regulations of NGOs via Government Counter-Terrorism Measures and
Policies, INTRAC Policy Briefing Paper 11 (Sep tember 2007, www.intrac.org); ICNL, Recent Laws and
Legislative Proposals to Restrict Civil Society and Civil Society Organizations, International Journal of
Not-for-Profit Law 8:4 (August 2006); David Moore, Safeguarding Civil Society in Politically Complex
Environments, International Journal of Not-for-Profit Law
9:3 (July 2007); and other publications.
5 Mark Sidel, The Third Sector, Human Security, and Anti-Terrorism in Comparative Perspective
(Keynote address delivered to the Seventh International Conference of the International Society for Third
Sector Research (ISTR)), Bangkok, July 2006); Mark Sidel, The Third Sector, Human Security, and Anti-
Terrorism: The United States and Beyond , 17 Voluntas: International Journal of Voluntary and Not-for-
Profit Organizations 199-210 (2006).
the charitable sector (sometimes called the nonprofit, not-for-profit, or “third”) sector in a
number of countries. A significant reason for that growing conflict and mistrust is the
perception on the part of a number of government s that the charitable sector is a link to
terrorism, through financing, ideology, and f acilitating meetings and organization.
More broadly, a number of governments do not now appear to regard civil society
and the charitable sector as a s ource of human security. Rather, they seem to regard the
third sector as a source of insecurity, not as civil so ciety but as encouraging uncivil
society, not as strengthening peace and human security, but as either a willing conduit
for, or an ineffective, porous and ambivalent barrier against insecurity in the form of
terrorism and violence.
There has always been mistrust of th e voluntary sector by governments in many
nations around the world. This mistrust is expressed by governments in tightened
regulation, stricter governance and financia l requirements, restrictions on foreign
funding, limitations on endowment growth and investments, barriers to advocacy, and a
host of other legal and policy requirements. But for a number of governments, the
current suspicion of civil society goes beyond traditional mistrust or skepticism and
reflects a vision of the charitable sector as a source of insecurity and incivility that has
fueled the reemergence of terrorism, particul arly in the wake of the 2001 and subsequent
attacks in Bali, London, Madrid, and elsewhere. Civil society and the voluntary sector is
now under suspicion and investigation for the role – real or alleged – that some charitable
organizations may have played in ties to terrorism. And even where governments do not
make the explicit ties between the charitable s ector and terrorism, the sector is generally
regarded as easily used by terrorism, an ineffective and porous source of finances,
organization, communications, and the transf er of goods and services for terrorist
The ripples of this pressure on civil societ y travel far indeed. The perception that
civil society is indeed uncivil and a source of insecurity contributes to an environment of
enhanced regulation of the voluntary sector, strengthened state oversight of voluntary
sector activities, and declini ng confidence in the sector’s ability to contribute to the
resolution of social problems and the advancem ent of human security. Governments that
believe that the third sector is a conduit fo r terrorism and a source of human insecurity
may respond with heightened regulation of the charitable sector, including new or
enhanced financial, governance, reporting or other restrictions. Sometimes these policies
may be relatively informal, more along the lines of what Professor Jude Howell has
called the “intangible creation of climates of opinion or shifting attitudes” toward the
6 Comments by Professor Howell at the Program on Terrorism and Development, London School of
Economics, 17 October 1995 (www.lse.ac.uk/collections/LSEPublicLecturesAndEvents/pdf/20051017-
These problems are not limited to the United States. Although this research paper
specifically addresses government the impact of government counter-terrorism measures
on the enabling environment for civil societ y in the United States, United Kingdom, and
Australia, these issues also arise – and of ten with great force – in a wide range of
countries, including Australia, Cambodia, Canada , the countries of Central Asia, China,
India, the Netherlands, Pakistan, the Un ited Kingdom, Pakistan, Zimbabwe, and
elsewhere throughout Asia, Afri ca, and Latin America.
Government responses may take many sp ecific forms, including prevention of
terrorism laws and regulations in India and el sewhere in South Asia that directly affect
the nonprofit sector (India and elsewhere in South Asia); enhanced restrictions on
gatherings and associational activities (China); limitations on funding and new
certification requirements for funders and nonprof its alike (the United States); inclusion
of charities in new anti-terrorism legislati on and enhanced investigations (the United
Kingdom); and a host of other measures.
The state policies may, depending on the count ry context, contribute to declining
funding for civil society and voluntary sector organizations, a declining ability for the
sector to obtain support for innovative programs, and an atmos phere of investigation and
suspicion that may envelop civil society. State policies may contribute to a shifting of aid
priorities including preferences for anti-terr orism programs in foreign aid. And such
government policies may contribute to timidity within the voluntary sector that may lead
to refusal to engage in impor tant and innovative but also pe rhaps controversial work at a
time when charities are under pres sure in a number of countries and intense pressure in a
few. Finally, these confli cts and circumstances demand that the voluntary sector do
more, and do more effectively, to regulate itself.
It is also important to note that the idea that the charitable sector is a source of
insecurity, even a conduit of te rrorism, may not be the primary factor in state attempts to
monitor or tighten control over the sector. Other factors can play a major role in such
policies. They can include opposition to the advocacy role of the sector, concerns about
accountability and transparency, the growing role of political and religious giving, and
the rapidly growing role of diasporas in social developm ent, among many other possible
factors. In some countries, and some situa tions, counter-terrorism may be a rationale or
even an excuse for tightening regulation, not the core reason.
The state policies may, depending on the count ry context, contribute to declining
funding for the sector, a declin ing ability for the charitable sector to obtain support for
innovative programs, and an atmosphere of i nvestigation and suspicion that may envelop
the sector. State policies may contribute to a shifting of aid priorities including
preferences for anti-terrorism programs in foreign aid. And such government policies
may contribute to timidity within the charitable sector that may lead to refusal to engage
in important and innovative but also perhaps controversial work at a time when charities
are under pressure in a number of countries a nd intense pressure in a few. Finally, these
conflicts and circumstances demand that th e charitable sector do more, and do more
effectively, to regulate itself.
A related problem is the limits of terrorist finance law in preventing terrorism,
particularly in the context of charities. Ca n laws against terrorist finance and penalties on
charities significantly assist in stopping terrorism when terrorists and their supporters
may have multiple means to channel funds? Wh en at least some forms of terrorism can
be financed at a relatively low cost? The eff ectiveness of the law in stopping terrorism is
necessarily part of an assessm ent of charities regulation and terrorist finance that takes
into account proportiona lity and balancing.
I. Counter-Terrorism, Civil Liberties, and the Enabling Legal and Political
Environment for Civil Soci ety in the United States
As the leading country in the “war on terror,” it is not surprising the counter-
terrorism law and policy has had perhaps th e greatest impact on – and engendered the
greatest anxiety about – the enabling legal, political, and policy environment for civil
society in the United States. The impact of counter-terrorism policy and law on civil
society in the United States has been both real and perceived, and it has spread across the
full range of government action. This section discusses the most important ways in
which counter-terrorism law and policy has a ffected the enabling environment for civil
society in the United States, as well as th e responses by American charities, foundations,
and other nonprofits in the United States to U.S. government counter-terrorism policies
and statutes since September 2001.
These responses have taken many forms, some overlapping across nonprofit sub-
sectors and some specific to particular pa rts of the nonprofit community or even a few
institutions. Responses differ at times by public charities and foundations, for example,
though at other times they have been allied in response to government initiatives such as
the “voluntary guidelines” on overseas giving. One particular subset of affected
institutions, indicted Muslim ch arities, has had a more severe set of challenges and thus a
differing set of responses.
Resistance, compliance, alliance, self -regulation and other actions have all
characterized the responses of the Ameri can nonprofit sector to government counter-
terrorism policies and legal regulation that has affected the sector in the aftermath of the
horrific and criminal September 11 attacks.
In the broadest sense, the American nonprofit sector has sought to maintain the
autonomy and vibrancy of the sector and of their individual organizations while agreeing
to and acceding in the government’s interest in preventing nonprofit organizations from
being conduits in terrorist fina nce or otherwise supporting terrori st organizations or goals.
In general terms much of the American regulation of counter-terrorism that
affects the nonprofit sector since Septembe r 11 has sought to prevent nonprofits being
used or choosing to become involved in terrori st finance, and thus we often see a certain
commonality of purpose between government and th e charitable sector on these issues.
The Framework of Counter-Terrorism Law and Policy and it Impact on Civil
Society in the United States
In the United States, enhanced regulation of charitable ties to terrorism (usually
reflecting concerns about terrorist financi ng) goes back to the 1993 bombing of the
World Trade Center, including legal provisions that allow proscription of terrorist
organizations and that bar “material support” to terrorist organizations. These provisions
have been the subject of extensive litigation in the United States and have generally been
By the time of the September 2001 attacks, a fairly comprehensive legal
framework for investigating and prosecuting char itable links to terrorism was in place. In
particular, the Antiterrorism and Effec tive Death Penalty Act, adopted in 1996,
criminalized “material support” for terrorist organizations through charitable and other
vehicles. The International Emergency Ec onomic Powers Act (“IIEPA”), originally
enacted in 1977, also prohibits transactions that the U.S. executive branch has determined
to be inimical to the nationa l security of the United States, including terrorist financing
These pre-2001 statutes we re supplemented almost immediately after September
11 by Executive Order 13224 (October 2001), wh ich eased the process of proscription
and freezing of terrorist assets, and by seve ral of the provisions of the Patriot Act
(November 2001), which were made applicable to the charitable sector. Among its
provisions, the Patriot Act expanded the abil ity of the government to seize assets of
“persons engaged in planning or perpetrati ng … terrorism,” or “acquired or maintained”
for that purpose, or “derived from [or] involved in terrorism.” The Patriot Act also
expanded the “material support” prohibition to further bar “expert advice or assistance”
to terrorist organizations, a bar that has been applied to charitable organizations and has
been the subject of extensive litigation. Such provisions are of course applicable to
charitable and nonprofit institutions as well as a much broader range of individuals and
Initial Prosecutions, Organizational Defiance, and Sectoral Disengagement
The government’s first moves in this area were against several Muslim charities,
initially the Benevolence International Foundation, Global Relief Foundation, and the
Holy Land Foundation for Relief and Developmen t. Each was closed and their assets
frozen in late 2001 and after on charges of violating the prohibition against providing
“material support and resources” to a foreign te rrorist organization, as well as violations
of the IIEPA, money laundering, tax evasion, an d other charges. Other organizations
were added to the proscription list and thei r assets frozen in the years that followed.
The government’s offensive against severa l Muslim charities was pursued with a
vigor that convinced many in the Ameri can nonprofit sector that the government’s
7 For further information, see Sidel, More Secure, Less Free? , chap. 6.
actions were based on solid evidence. But in the heat of the environment after the
horrendous and murderous attacks of Septem ber 2001, the remainder of the American
nonprofit sector – with virtually no exceptio ns – did not criticize the breadth of
government tactics in the investigation and cl osure of Muslim charities that admittedly
distributed funds in the Muslim world and, admittedly, in some cases to terrorist
organizations and the families of suicide bombers.
Some, however, tried to i ndicate problems with the breadth and potential
implications of government’s approach. Key Muslim community organizations warned
that the government’s actions contributed to an anti-Muslim backlash. But outside the
Muslim community, there were few dissenting vo ices. One of the few was the director of
an umbrella association of nonprofits in Ohio, in the American industrial Midwest. This
nonprofit leader stepped forward in 2002 to warn of the quote “implications of the
unprecedented effort by federal agencies, working in concert, to shut down significant
charities, seize their records and assets, and force the organizations to suspend operations
until their innocence can be proven.”
But those voices were solitary ones in the sector. Most of the nonprofit sector in
the United States hoped for a kind of unspoken bargain with the government:
government criminal enforcement would be limited to Muslim charities that had funneled
donations to some combination of terrorist and charitable activities abroad, and those
organizations would be considered guilty unti l proven innocent. Meanwhile, in the other
side of this unspoken bargain, the rest of the American nonpr ofit sector seemed to hope
that the broader sector would remain una ffected, undisturbed by the investigations,
indictments and broad statements about a group of registered Muslim charities, nor the
possibility that the new Patriot Act could be applied vigorously against the nonprofit
sector well beyond a handful of Muslim charities.
The director of the Ohio nonprofit associ ation challenged that unspoken bargain.
“Will any organization be subject to the same treatment if the government claims links to
terrorism? How broadly will terrorism be defined …. ? What about eco-terrorism, or
domestic disruptions such as the protests organized against global trade and financial
institutions? If a major U.S. philanthropic institution is di scovered to have made a grant
to an organization that the government claims is linked to terrorism, will it be subject to
the same ‘seize and shut-down’ treatment?”
But that nonprofit leader stood virtually alone, other than the embattled lawyers
for the Muslim charities. At this first stage of prosecution of Muslim charities on
“material support” and other grounds, the respon se from the charities was defiance in an
8 These prosecutions are discussed in more detail in Sidel, id.
9 Richard Moyers, A Shocking Silence on Muslim Charities , Chronicle of Philanthropy , 17 October 2002.
atmosphere in which the government was clearly the stronger actor, and disengagement
from the remainder of the nonprofit community.
Broadening Sectoral Opposition and Self-R egulation as a Response to Broadening
Government Policy against the Nonprofit Sector
In late 2002, however, the U.S. administ ration took a broader action that more
deeply concerned a wider range of the Am erican philanthropic and nonprofit sector.
That step was the release of the Anti-Terrorist Financing Guidelines: Voluntary Best
Practices for U.S.-based Charities , by the U.S. Treasury Department in late 2002. The
Guidelines provided a broad and detailed ra nge of new provisions for charitable and
philanthropic organizations to use in thei r overseas giving, intended to prevent the
channeling or diversion of American funds to terrorist organizations or purposes. These
steps included the colle ction of considerably more info rmation about grantees than is
often available, the vetting of grantees, ex tensive donor review of financial operations
beyond industry norms, and other requi rements in quite detailed terms.
In the words of Barnett Baron, Executiv e Vice President of the Asia Foundation,
the 2002 Treasury Guidelines carried the dange r of “setting potentially unachievable due
diligence requirements for international gr ant-making, [and] subjecting international
grant-makers to high but largely undefined levels of legal risk, [w hich] could have the
effect of reducing the already low level of legitimate international grant making.”
When threatened by government action that many prominent public charities
active in overseas aid and foundations consid ered overbroad, vague, and impossible to
effectively implement, a significant portion of the American philanthropic and nonprofit
community providing aid and support overseas began to act, complaining about the
breadth of the government’s so -called “voluntary” prescriptions, and banding together in
A band of major charities and foundations, angered and anxious at the sweep of
the Treasury’s new guidelines and fearful that “voluntary best practices” would be treated
as law even though they had not been adopt ed by Congress or formally adopted by a
government agency, sought to engage the U.S. Treasury in discussions on the Anti-
Terrorist Financing Guidelines. When they did not receive satisfactory responses from
those episodic conversations , and after a lengthy process among themselves, these
foundations and charities active overseas also proposed a new approach that sought to
employ the power of alliance a nd opposition to strengthen self-regulation as a means of
forestalling government action: what they called the Principles of International Charity.
11 U.S. Treasury Department, Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-
Based Charities , November 2002.
12 Barnett Baron, Deterring Donors: Anti-Terrorist Fina ncing Rules and American Philanthropy ,
International Journal of Not-for-Profit Law
6(2), 1-32 (2004).
They prefaced their new Principles by noting that “after consideration of both the
effectiveness of existing procedures and the implications of strict compliance with the
[Anti-Terrorist Financing] Guidelines, charitable organizations concluded that that
Guidelines are impractical given the realit ies of international charitable work and
unlikely to achieve their goal of reducing the flow of funds to terrorist organizations, but
very likely to discourage international char itable activities by U.S. organizations.” The
nonprofits asked the government to withdraw the onerous and ineffective Treasury
Department Guidelines and to substitute the new Principles of International Charity
drawn up by the nonprofit and philanthropic sector.
Those Principles of International Charity emphasized compliance with American
law but also that charitable organizations and foundations are not agents of the U.S.
government. They emphasized that charities are responsible for ensuring, to the best of
their ability, that charitable funds do not go to ward terrorist organizations, and that there
are key baseline steps that can be taken to help in reaching that goal – but also that there
are a diverse range of ways to accomplish th at goal, and that different methods of
safeguarding and protection will work for di fferent kinds of organizations that have
different types of risk. And the charitab le organizations concluded, “each charitable
organization must safeguard its relationship with the communiti es it serves in order to
deliver effective programs. This relationship is founded on local understanding and
acceptance of the independence of the charita ble organization. If this foundation is
shaken, the organization’s ability to be of assistance and the safety of those delivering
assistance is at serious risk.”
In response to the charitable and philanthropic sector’s concern, and because of
the unworkability of the earlier, hastily dr afted Guidelines, the Treasury revised its
Guidelines on overseas giving in December 2005. The “revised” Anti-Terrorist
Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities did make some
improvements, particularly in reducing some of the onerous and unworkable due
diligence burdens on American organizati ons providing charitable funds overseas.
But three basic issues remained that were of continuing and deep concern to the
nonprofit sector. First, in the words of the concerned charities and foundations, “the
revised Guidelines contain provisions that [continue to] suggest that charitable
organizations are agents of the government.” Such an assumption could lead both to
13 Principles of International Charity (developed by the Treasury Guidelines Working Group of
Charitable Sector Organizations and Advisors, March 2005) (www.independentsector.org/programs/gr/
CharityPrinciples.pdf). In effect, the organizations so ught to convince the authorities that a self-regulatory
approach would work better in controlling these matters.
15 U.S Treasury Department, Revised Anti-Terrorist Financing Guidelines: Voluntary Best Practices for
U.S.-Based Charities (2005) (www.treas.gov/offices/ enforcement/key-issues/protecting/charities-
intro.shtml). This approach mean s, perhaps ironically, that legitimate and well-meaning charities will
struggle to comply with standards while less professional or less well-meaning groups may not, as
Professor Kent Roach has pointed out to me.
declining effectiveness and to severe harm to American aid personnel working overseas.
Second, the revised Guidelines seem to re quire nonprofits funding overseas to collect
even more data than the or iginal 2002 Guidelines would have required. And third, the
nonprofit community remained deeply concerne d that these so-called “voluntary best
practices” were in fact stealth law, adopted without consideration by Congress or formal
rulemaking by an agency. In the words of the concerned ch arities and foundation
Working Group, “we are concerned that the revi sed Guidelines will evolve into de facto
legal requirements through inco rporation into other federal programs, despite the
inclusion of the word “v oluntary” in the title.”
When directly confronted with govern ment action that would impinge on the
ability of American nonprofits and foundations to undertake overseas giving and perhaps
endanger their programs, the American nonprofit and philanthropic sector began to resist
aspects of the new government regulation of th e nonprofit sector based in anti-terrorism.
A battle of sorts has been joined between the government and the philanthropic sector
over overseas giving, and neither side is givi ng in: The Treasury has not withdrawn the
new, revised Guidelines on ove rseas giving. Instead it issued a third, re-revised version
of the Guidelines in late 2006,
17 and then, without consul ting with the American
nonprofit and philanthropic sector, it issued a “risk matrix” for charitable institutions to
use in connection with th eir overseas giving in 2007.
18 In turn, the nonprofit community
continues to urge that its Principles of International Charity should be substituted for the
government’s revised Guidelines.
Foundation Responses to Strengthened Government Policy and Regulation:
Disengagement, or Shifting Risk to Grantees
16 Council on Foundations, Letter to the U.S. Treasury Department on the Revised Anti-Terrorist
Financing Guidelines (2006) (www.usig.org/PDFs/ Comments_to_Treasury.pdf).
17 See https://www.ustreas.gov/offices/enforcement/k ey-issues/protecting/docs/guidelines_charities.pdf.
This most recent version of the Treasury Guidelines, and particularly differences from the earlier versions
and sector reaction, will be discussed in the publication version of the paper.
18 For the Treasury’s risk matrix for the char itable sector, see www.treas.gov/offices/enforcement/ofac/
19 A number of other issues have arisen as we ll, but space precludes a full discussion here. These
problems include controversies over testimony by the Director of the Office of Strategic Policy for
Terrorist Finance and Financial Crimes to the Senate Homeland Security and Governmental Affairs
Committee (May 2007); a report by the Treasury De partment’s Inspector General for Tax Administration
(TIGTA) criticizing the Internal Re venue Service for not using the FBI Terrorist Screening Center
consolidated watchlist to check for matches and pro cess issues (May 2007); concerns raised by the
American nonprofit community on th e re-design of the Form 990, which reports on nonprofit activities,
governance and finances to the Treasury (June 2007); and requests by the nonprofit community that funds
blocked (for example, Muslim charitable funds blocked) under Executive Order 13224 be released for
charitable usage, a request thus far denied by the government on grounds that those blocked funds must be
retained for payment of civil judgments that may be entered against blocked charities. Discussions of these
developments can be found at www.ombwatch.org.
In the philanthropic sector, some American foundations have been deeply
concerned about potential i nvestigations of their grant making by the executive or
legislative branches. Others have largel y ignored the issues, and disengaged from
considering the impact of strengthened government counter-terrorism policy and
regulation on their work beyond ch ecking terrorist watch lists.
Those who are concerned – usually foundati ons that do extensive work overseas –
have responded in some cases by shifting re sponsibility to their grantees, through new
and broadly worded grant letters , not to engage in any activity that might be considered
redolent of bigotry or encourag ing terrorism or violence.
The Ford Foundation has been particularly active in this area, arising out of its
disgust with the anti-Semitic statements made by one of its grantees at the United Nations
Conference on Racism in Durban in 2000. But the breadth of the prohibitions and
shifting of risk to grantee organizations in its new grant letters prompted opposition from
a group of elite universities and a decision by the American Civil Liberties Union not to
sign the broad new grant letter provisions and thus not to accept new funds from Ford,
sharp response to the ri sk-shifting approach that Ford had adopted.
Ford introduced new grant language in 2003 that required grantees to promise not
to engaged in a wide array of speech and ot her activities that might be perceived as
bigotry or as encouraging terro rism or violence. The new grant letter stated that “By
countersigning this grant letter, you agree th at your organization will not promote or
engage in violence, terrorism, bigotry or th e destruction of any State, nor will it make
subgrants to any entity that engages in these activities.”
That broad new grant language left open, at least in the minds of a number of
university grantees, whether gran tees would be forced to limit speech or other activities
because certain speech and ac tivities – conducted on but not in the name of universities,
for example – might be interpreted as vi olating the grant letter agreement. The
Rockefeller Foundation introduced similar langua ge as well. Concerned by the breadth
of the language and prohibitions, a number of elite universities refused to sign the new
After negotiations between the Ford Founda tion and a number of universities, the
Foundation reaffirmed its commitment to ac ademic freedom and free speech on campus,
making clear that the language in the grant letter was not intended to interfere with
academic freedom and free speech. In at leas t one case – Stanford – where the institution
remained wary of signing the Foundation’s very broad language, a “side letter” was
20 Sidel, More Secure, Less Free? , id.; S. Sherman, Target Ford, The Nation , 5 June 2006.
21 Quoted from a 2007 Ford Foundation grant letter; it is possible that some variations in wording were
issued to that institution recommitting Ford in strong terms to academic freedom and free
But this issue affected others as well. In 2004, after extensive internal debate, the
American Civil Liberties Union also bega n declining Ford Foundation and Rockefeller
Foundation grants. The ACLU did so, in the words of its Executive Director, Anthony
Romero, “rather than accept re strictive funding agreements that might adversely affect
the civil liberties of the ACLU and other grantees” by restricting the free speech rights of
the ACLU and its members. The ACLU issu ed a statement that primarily blamed the
government, not the Ford Founda tion, for this conflict:
“This administration and its war on terror have created a climate of fear that
extends far beyond national security concer ns and threatens the civil liberties of
all Americans …. The board and leadership of the ACLU have made the painful
but principled decision to turn down $1.15 million in future funding from the Ford
and Rockefeller Foundations rather than accept restrictive funding agreements
that might adversely affect the civil lib erties of the ACLU and other grantees…. It
is a sad day when two of this countr y’s most beloved and respected foundations
feel they are operating in such a climate of fear and intimidation that they are
compelled to require thousands of reci pients to accept vague grant language
which could have a chilling effect on civi l liberties. But the ambiguities are
simply too significant to ignore or acce pt. They include potential prohibitions on
free speech and other undefined activiti es such as “bigotry” as part of a
misconceived war on terror. Indeed, vague terms such as “bigotry” often have
charged meanings in a post-9/11 world. The ACLU cannot effectively defend the
rights of all Americans if we do not st and up for those same rights ourselves….”
This was a remarkable break. The Ford Foundation and the ACLU have a long
and close history of work together on major civil liberties issues, and Ford has provided
millions of dollars in grants to the ACLU for programs, operating costs, and endowment.
The President of the Ford Foundation, Su san Berresford, responded in a clear but
subdued statement in which Ford’s respect for the ACLU was fully clear:
“We share the same basic values as th e ACLU. The ACLU is dedicated to
defending free speech, and we fully support th eir work in doing so. We also fully
support their work in defending the rights of promoters of unpopular causes. That
is why we have provided significant gene ral financial support to the organization
over the years for the full range of its activities…. The issue at hand has to do
22 For a detailed account of Stanford’s discussions with Ford from the Stanford perspective, see the
January 26, 2005 minutes of the Stanford Faculty Senate at news-service.stanford.edu/news/2005/
23 See ACLU Declines Ford an d Rockefeller Grants Due to Restrictive Funding Agreement; Painful but
Principled Decision to Put Civil Liberties First, Statement of Anthony D. Romero, ACLU Executive
Director, October 17, 2004, at www.aclu.safefree/general.
with our different missions. Ford’s mission is to strengthen democratic values,
reduce poverty and injustice, promote international cooperation and advance
human achievement. Consistent with th at mission, we are proud to support the
ACLU’s defense of free speech. We do not , however, believe that a private donor
like Ford should support all speech itself (suc h as speech that promotes bigotry or
violence). We accept and respect the fact that we have a different mission from
the ACLU, even while we share the same basic values…. We hope that over time
we will once again work together.”
This sort of philanthropic resistance ha s been largely limited to some elite
American universities and groups like th e ACLU. But in 2007, a prominent Indian NGO
also raised this issue with the Ford Foundation, requesting modification of the
Foundation’s grant letter to re strict the very broad limitations to which it would have
bound the Indian grantee or that the Foundation provide “assurances of its commitment to
the value of independent citi zenship and civil society actions to hold … governments and
their leaders to account.” This Indian orga nization has been told that it is “the only
southern NGO to raise this issue.”
Broadening Government Regulation, Broade ning Sectoral Opposition – and a Victory
In another related step, du ring the summer of 2004 the U. S. federal agency that
runs the Combined Federal Campaign – the integrated giving effort for hundreds of
thousands of federal employees in which government workers donate to nonprofit
organizations – announced a signific ant change in its policies.
The agency issued a memorandum re quiring each nonprofit receiving CFC funds
to certify that it “does not knowingly employ individuals or contribute funds to
organizations found on the … terrorist related lists promulgated by the U.S. Government,
the United Nations, or the European Uni on.” The new, mandatory certification
requirement was explicitly drawn from the provisions of the so-called “voluntary” anti-
terrorism financing guidelines issued by the Treasury Department in 2002.
This new requirement ignited a firestorm of controversy. A number of American
nonprofit organizations refused to sign the ce rtification, arguing that they could not
vouch for every single one of their employees , contractors, consultants and anyone else
who worked with their organizations, partic ularly given the chaotic nature of the
government’s terrorist watch lists. Finding su ch a name, though clearly a false positive,
would require nonprofits to as k the employee “intrusive questions about his [or her]
24 Statement of Susan V. Berresford in resp onse to announcement by the American Civil Liberties
25 Letter from [redacted individual, redacted organization] to Ganesan Balachander, Representative, The
Ford Foundation, New Delhi, October 1, 2007,
26 Combined Federal Campaign, Combined Federal Campaign Memorandum 2003-10, New
Certification for 2004 CFC Application (2003) (www.opm.gov/cfc/opmmemos/2003/2003-10.asp).
personal life and beliefs.” 27 They argued that the federal agency administering the
Combined Federal Campaign lacked the statutor y or constitutional authority to issue this
new regulation, and that doing these kinds of checks would violate the privacy and
associational rights of their employees. And they opposed the conversion of the so-called
“voluntary” guidelines issued by the Treasury Department into a legal mandate without
Congressional approval or formal rulemaking.
Eventually the American Civil Liberties Union and a number of other
organizations filed suit against the fede ral government seeking to overturn the new
29 In the meantime, nonprofits lost funds because of their
refusal to sign the certifi cation – the ACLU, for example, lost $500,000 in donations by
federal government employees in 2005.
30 In November 2005, however, the federal
government withdrew the new requirement that recipient organizations under the
Combined Federal Campaign sign the certificat ion in favor of a much more general
pledge by organizations participating in the Combined Federal Campaign that they are in
compliance with existing anti-terrorist financing laws.
It would be unfortunate, how ever, to leave the impression that the “shifting of
risk” to grantees is occurr ing only by private foundations and the aborted effort by the
Combined Federal Campaign. In recent years at least several local United Ways in the
United States – and possibly a large number – have been requiring that each nonprofit
agency receiving funds from the United Way to certify that the receiving agencies
comply with anti-terrorist financing laws and regulations; th at individuals or
organizations that receiving agencies work with are not on government terrorism watch
lists; and/or that no material support or reso urces are being provided to support or fund
The forms of these required certificati ons seem to vary depending on the United
Way and perhaps depending on the year invo lved. In 2007, for example, the United Way
of New York City required th at receiving agencies certify “that all United Way funds and
27 American Civil Liberties Union, ACLU Announces Diverse Nonprofit Coalition Opposing Restrictions
on Recipients of the Combined Federal Campaign , 12 August 2004 (www.aclu.safefree/general).
28 ACLU to Withdraw from Charity Drive , New York Times , 1 August 2004; Nonprofits Scramble to
Meet Terror Rules; Worker Screening Required for CFC funds , Washington Post
, August 14, 2004; see
also Sidel, More Secure, Less Free?
29 Charities Sue Over Antiterrorism Certification Regulation , New York Times , 11 November 2004;
Groups Sue OPM on Terrorism Rule; Ch arities Told to Screen Workers, Washington Post
, 11 November
30 ACLU Board is Split Over Terror Watch Lists , New York Times , 31 July 2004.
31 Requirement on Watch Lists is Dropped , New York Times , 10 November 2005.
donations will be used in compliance with all applicable anti-terrorist financing and asset
control laws, statutes and executive orders.” 32
Another major United Way agency in anot her large American city required each
receiving agency to “represent that it take s reasonable steps to: I. Verify that
individual or entities to which it provides, or from which it receives, fund or other
material support or resources are not on the U.S. Government Terrorist Related Lists; II.
Protect against fraud with respect to … mate rial support or resources to person[s] or
organizations on such lists; and III. Ensure that it does not knowingly provide financial,
technical, in-kind or other mate rial support or resources to any individual entity that it
knows beforehand is support or funding te rrorism….” (internal grammar adapted)
The great breadth of this re quired certification or “repre sent[ation]” is clearly an
attempt to shift risk of non-compliance w ith any government regulation to the nonprofit
concerned, and away from the funding agency.
Opposition in Isolation: The Lone ly Struggle over “Material Support”
The prosecutions and deregistration of Benevolence, Global Relief, Holy Land
and other Muslim charities have been pursued over a number of years and in several
cases remain under prosecution. In many cases those government actions are based on
the provisions of law, carried forward from before 2001 but st rengthened since, that ban
“material support” to terroris m and terrorist organizations.
These “material support” provisions have been among the most controversial
legislative provisions on terrori sm affecting the nonprofit sector in the United States. The
crime of providing material support to terrori sm was drafted into the Antiterrorism and
Effective Death Penalty Act of 1996, which was adopted after the Oklahoma City
bombing in 1996.
In its original form, the 1996 Act provid ed criminal and civil penalties for anyone
who “provides material support or resources or conceals or disguises the nature, location,
source, or ownership of material support or resources, knowing or intending that they are
to be used in preparation for, or in carrying out [various terrorist offences] or in
preparation for, or in carr ying out, the concealment from the commission of any such
violation….” The 1996 Act also criminalized “knowingly provid[ing] material support or
resources to a foreign terrorist organization, or attempt[ing] or conspire[ing] to do so,” in
accordance with the procedures for “desi gnating” foreign terrorist organizations.
32 United Way of New York City, Anti-Terrorism Compliance Measures form (2007), on file with the
33 United Way of [xxx], USA Patriot Act [on cover sheet] Statement of Compliance (2007), on file with
the author. Location redacted to protect source.
In the 1996 Act, “material support or resources” was defined as “currency or other
financial securities, financia l services, lodging, training, sa fehouses, false documentation
or identification, communicati ons equipment, facilities, weapons, lethal substances,
explosives, personnel, transportation, and ot her physical assets, except medicine or
The material support provisions came under attack even before September 11. A
U.S. district court in 1998,
34 and then the U.S. Court of Appeals for the Ninth Circuit 35
ruled in 2000 that the terms “training” and “personnel” were unconstitutionally vague
because they might include constitutionally pr otected activities within their scope. The
Ninth Circuit also “construed the AEDPA to require that the donor of material support
have knowledge that the recipi ent either had been designated as a foreign terrorist
organization or engaged in terrorist activities.”
36 This litigation continued after
The Patriot Act expanded the offense of material support in several important
ways. It added “monetary instruments” to the definition of “material support or
resources,” filling a possible lacuna between “cu rrency” (cash) and “financial securities.”
Perhaps more importantly, it added the term “expert advice or assistance” to the
definition of “material su pport or resources.”
So by late 2001, American legislation barred “material support or resources”
defined as “any property, tangi ble or intangible, or service, including currency or
monetary instruments or financial securities, financial se rvices, lodging, training, expert
advice or assistance, safehouses, false docum entation or identification, communications
equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more
individuals who may be or in clude oneself), and transporta tion, and other physical assets,
except medicine or religious materials.”
By not removing the term “training,” in th e Patriot Act, but adding “expert advice
or assistance,” the Patriot Act “only increase[ d] the ambiguity” in the scope of activity
37 “This vague language allows wide -ranging prosecutorial discretion and
could chill legally protected activities by nonprof its, which might fear criminal charges.”
And OMB Watch quotes David Cole noting that “the reason material support laws have
proven so popular with federal prosecutors is that … these laws do not require proof that
an individual intended to furt her any terrorist activity…Under this law it would be a
34 Humanitarian Law Project v. Reno , 9 F. Supp. 2d 1176 (C.D. Cal. 1998).
35 Humanitarian Law Project v. Reno, 205 F.3d 1130 (9 th Cir. 2000).
36 Humanitarian Law Proj ect v. Gonzales 2005, p. 6.
37 OMBWatch report on material support provisions, www.ombwatch.org.
crime for a Quaker to send a book on Gandhi’s theory of nonviolence — a ‘physical asset’
— to the leader of a terrorist organization in hopes of persuading him to forgo violence.” 38
In the years after 2001 ther e has been extensive litigation on the scope, meaning
and constitutionality of the material support provisions. In 2004, a federal court in
California ruled that “the term ‘expert ad vice or assistance,’ like ‘training’ and
‘personnel.’ [invalidated earlier ] to be impermissibly vague.”
Congress attempted to fix these various pr oblems in the late 2004 revision to the
Antiterrorism and Effective Death Penalty Act and the Patriot Act by reformulating the
scope of the “personnel”, “tra ining,” and “expert advice or assistance” provisions of the
Congress mandated that “no person may be prosecuted under this section in
connection with the term “personnel” unless that person has knowingly provided,
attempted to provide, or conspi red to provide a foreign terrorist organization with 1 or
more individuals (who may be or include himself) to work under that terrorist
organization’s direction or cont rol or to organize, manage, supervise, or otherwise direct
the operation of that organization. Individuals who act entirely independently of the
foreign terrorist organization to advance its goals or objectives shall not be considered to
be working under the foreign terrorist organization’s direction and control.”
Congress also legislated an “exception” to the “personnel”, “training,” and
“expert advice or assistance” prohibitions “i f the provision of that material support or
resources to a foreign terror ist organization was approved by the Secretary of State with
the concurrence of the Attorn ey General. The Secretary of State may not approve the
provision of any material support that may be used to carry out terrorist activity (as
defined in section 212(a)(3)(B)(iii) of the Immigration and Nationality Act).” It added
the notion that providing support oneself to terrorism may constitute “material support,”
by redefining the provision of “personnel” in the 1996 to include “1 or more individuals
who may be or include oneself” “to work unde r that terrorist organization’s direction and
control or to organize, manage, supervise or otherwise direct the operation of that
organization.” The 2004 amendments also stip ulate that “individuals who act entirely
independently of the foreign terrorist organizat ion to advance its goals or objectives shall
not be considered to be working under the fo reign terrorist’s organization’s direction and
The 2004 amendments also sought to define the types of “training” and “expert
advice or assistance” that would trigger applic ation of the materials support provision.
“Training was defined as “instruction or teaching designed to impart a specific skill, as
38 David Cole, The New McCarthyism: Repeating History in the War on Terrorism , 38 Harv. C.R.- C.L.
L. Rev. 1, 9 (Winter 2003).
39 Humanitarian Law Proj ect v. Gonzalez 2005, p. 8.
40 18 U.S.C. § 2339B(h).
opposed to general knowledge.” “Expert advice or assistance” was defined as “advice or
assistance derived from scientific, tec hnical or other specialized knowledge.”
And Congress also mandated that “nothing in this section shall be construed or
applied so as to abridge the exercise of rights guaranteed under the First Amendment to
the Constitution of the United States.” And Congress “clarified a mens rea requirement
that the donor know that the foreign terrorist organization has been designated as a
foreign terrorist organization or has engaged in terrorist activities,”
41 stipulating that “a
person must have knowledge that the organiza tion is a designated terrorist organization,
that the organization has engage d or engages in terrorist activity, or that the organization
has engaged or engages in terrorism.”
42 In short, “Congress’s 2004 … amendment
underscores Congress’s decision to dispense wi th any specific intent requirement. The
2004 … amendment clarified that the only mens rea required under §2339B is that a
donor know that the recipient is a foreign terrorist organization.”
In response to the Congressional amendm ents, the Ninth Circuit affirmed the
District Court’s 2001 order “holding the term s ‘training’ and ‘personnel’ impermissibly
vague … [and] vacated its  order … in which it had previously construed the [1996
Act] to require knowledge that a recipient organization was either a foreign terrorist or
had engaged in terrorist activities.”
In response, the same plaintiffs once again questioned the constitutionality of
several important elements of the “material support” provisions after the amendments
became law. The same federal court in Califor nia ruled in 2005 that “the terms ‘training’
and ‘expert advice or assistance’ in the form of ‘specialized knowledge’ and ‘service’ are
impermissibly vague” under the Constitution but that other challenges to the material
support provisions failed.
“Training” was originally judged imperm issibly vague because “it easily reached
protected activities, such as teaching how to seek redress for human rights violations
before the United Nations.” Adding the defini tion of training as “instruction or teaching
designed to impart a specific skill, as opposed to general knowledge,” “fails to cure the
vagueness concerns that the Court previously identified” and “leaves the term ‘training’
impermissibly vague because it easily encomp asses protected speech and advocacy, such
as teaching international law for peacemaking resolutions or how to petition the United
Nations to seek redress for human rights violations.”
41 Humanitarian Law Proj ect v. Gonzales 2005, p. 7.
42 18 U.S.C. § 2339B.
43 Humanitarian Law Proj ect v. Gonzales 2005, p. 24.
44 Humanitarian Law Proj ect v. Gonzales 2005, p. 7.
45 Humanitarian Law Proj ect v. Gonzales 2005, p. 29.
46 Humanitarian Law Project v. Gonzalez 2005, p. 29, 30.
Similarly, the vagueness of “expert advice or assistance” is not fixed because,
“even as amended, the statute fails to iden tify the prohibited conduct in a manner that
persons of ordinary intelligence can reas onably understand,” and “includes the same
protected activities that ‘training’ covers….”
47 The term “service” in the material
support statute was also impermissibly vague under the Constitution. In 2006, a federal court in California rule d that the post-September 11 executive
order issued by the President banning “ser vices” for terrorist organizations was not
unconstitutionally vague or overb road; that other terms used were not unconstitutionally
vague. But the court also ruled that th e President’s designation of 27 terrorist
organizations in the order had been done “provide[d] no explanation of the basis upon
which these twenty-seven groups and individu als were designated, and references no
findings akin to those the secretary of treasury is required to make … [and] the
procedures for challenging designations made by the secretary of treasury are not clearly
available with regard to designations made by the Pres ident….[T]he President’s
designation authority is subject only to his unfettered discretion…” and thus
“unconstitutionally vague.” It also found that “the prohibition on being ‘otherwise
associated with’ an SDGT on its face uncons titutionally intrudes upon activity protected
by the First Amendment.” It is also uncons titutionally overbroad because it “imposes
penalties for mere association with an SDGT.”
In 2007, attempts were even made to strengthen and broaden the “material
support” prohibition. Legislators introduced an amendment that would have redefined
material support to apply to any individual who “provides material support or resources
to the perpetrator of an act of international terrorism, or to a family member or other
person associated with such perpetrator, with the intent to facilitate, reward, or encourage
that act or other acts of international terrorism.”
As the Washington-based NGO OMBWatch noted, “the terms ‘family member’
or ‘person associated’ were not defined in the amendment. Under this language, it may
have been possible that someone who provided water or medi cal care to the child of a
suicide bomber would have been subjected to criminal penalties. This legislative
vagueness, combined with severe penalties, had the potential to di scourage humanitarian
aid and development programs, particularly in high-risk areas where such aid is greatly
needed.” 48 Penalties would have been increased to up to 25 years in prison, or up to life
in prison if a death resulted. 49
47 Id., p. 32.
48 Senate Votes Down Effort to Expand Definition of Material Support, OMB Watch, 20 March 2007,
49 On recent issues in this area, s ee Shutting Out Terrorism’s Victims (editorial), The New York Times , 9
March 2007; www.nytimes.com/2007/03/09/opinion/.
Material support issues have remained at the forefront of concern in the United
States about the impact of counter-terrori sm law and policy on the enabling legal and
policy environment for civil society. These issues came to the fore in the first major
“material support” prosecution in the United States, the trial of the Holy Land Foundation
and its leaders in 2006-2007. In that trial, the defendants were acquitted on a number of
the major material support-related charges in the fall of 2007. That fall, Muslim
organizations and charities renewed a call to the government for guidelines on safe
giving, because of the continuing anxiety wi thin American Muslim communities that
their charitable donations would be subject to special scrutiny by the government. Some
Muslim charities and other organizations re ported continuing problems in relationships
with banks and banking authorities. 50
What can we learn from the difficult and complex history of counter-terrorism
law and policy and its impact on the enabling e nvironment for civil society in the United
States since 2001?
Statutes and regulation barring various forms of charitable assistance to or use by
terrorists were generally in place before September 11. They have been rapidly
broadened in the ensuing seve ral years, either through positive law or through so-called
“voluntary” measures, “guide lines” or other methods. As the Combined Federal
Campaign and other episodes indicate, these me asures tend to continue to broaden still
further over time, either in scope or in application.
Opposition has been episodic and, perhaps understandably, significant opposition
and resistance has been largely limited to gr oups directly affected by counter-terrorism
policy and law, such as Muslim charities, or a few leading voices in the civil liberties
arena such as the American Civil Liberties Union. Broader opposition or resistance has
emerged where government effort s were perceived as dangerous to the broader sector, as
in the government’s guidelines on overseas gi ving, which sparked broader discontent and
opposition in the sector.
Where opposition or resistance has emerged, it has taken diverse forms depending
on the nature of the government action or threat and the breadth of opposition. Those
may include alliance-building, litigation by i ndividual organizations, and other strategies
discussed in this paper – but never have those strategies been sector-wide.
Of these, attempts by the nonprofit sector to strengthen self-regulation have
emerged as a method of forestalling either further government intervention or the
application of new or existing policies. This new self-regulation “imperative,” as I have
discussed it in a broader context, enables th e American nonprofit sector to try to address
broader issues of accountability and transparency while also addressing specific problems
of counter-terrorism law. The Principles of International Charity proposed by a group of
50 Further information on these developments is available at www.ombwatch.org.
nonprofit and philanthropic organizations are one key example of the use of self-
regulation as a sophisticated defensive strategy. 51
The Dangers in the Failure to Oppose
Six years after the September 11 attack s and the strengthening of government
counter-terrorism regulation in the United St ates, we may begin to draw some lessons
from nonprofit and philanthropic sector responses to government action in this area. The
parts of the nonprofit and philanthropic sector that have been directly prosecuted or
attacked have responded with vigorous lega l and public defenses, but much of the
American nonprofit sector, not directly aff ected by new government policy, has remained
quiescent. And in that quiescen ce poses potential dangers.
One danger in nonprofit sector passivity is the assumption that government action
vis-à-vis the nonprofit sector wi ll be limited to organizations under formal investigation,
indictment, or prosecution. But events in 2005 and 2006 directly challenged the hopeful
assumption of many American nonprofits and philanthropic organizations that
government actions would be directed solely against a few Muslim charities and other
targeted groups, and that the remainder of the nonprofit sector would be left alone.
The American press has revealed that the U.S. government has in fact targeted a
much broader swathe of the American nonprof it sector for surveillance and observation
than was originally understood or assumed. Hundreds or even thousands of American
nonprofits have had events observed, telephone calls sorted, or financial transactions
examined by government agencies.
52 And in early 2007 it was revealed that the U.S.
government is employing donor-tracking software to search and correlate donors to an as-
yet undefined range of nonprofit institutions.
Despite these growing ripples of influe nce on the broader nonprofit sector from
government activity, there is relatively little hope that the broader American nonprofit
and philanthropic sector will take a more active role in opposing over-reaching impacts
of government counter-terrorism policy and law on the sector, or in providing assistance
to legal efforts to provide a legitimate defense to organizations that have been indicted
and prosecuted. U.S. government policy has fairly carefully avoided targeting large
51 In this as in many other aspects of the relationships between nonprofits and counter-terrorism, the
situation in the U.K. appears to be quite different. In the U.K., the important role of the Charity
Commission in educating the charitabl e sector and seeking to forestall these issues through proactive
institutional action, as well as its role in knowledgeab le investigatory and enforcement action, has perhaps
reduced the need for a “self-regulatory” ap proach given the Commission’s multiple roles.
52 See, e.g., MSNBC, Is the Pentagon Spying on Americans? Secret Database Obtained by NBC News
Tracks ‘Suspicious’ Domestic Groups , MSNBC.com
(NBC News), 14 December 2005; Surveillance Net
Yields Few Suspects, The Washington Post
, 5 February 2006.
53 Anti-Terrorism Program Mines IRS Records; Privacy Advocates are Concerned that Tax Data and
Other Information May Be Used Improperly , Los Angeles Times
, 15 January 2007.
swathes of the American nonprofit and philanthropic sector, and there has avoided the
emergence of large-scale opposition.
Opposition and resistance has been largely limited to specific organizations and
sub-sectors that have come under investiga tion, strengthened regulation, or prosecution,
with the broader array of nonprofits and phila nthropic institutions staying away from
those battles. To the degree th at the broader sector has reacted to increasing government
efforts, that has been primarily through br oad-based support for increased self-regulatory
efforts – a form of compliance that, the se ctor hopes, put the nonprofit and philanthropic
community increasingly in ch arge of its own destiny.
But additional dangers emerge as well. In recent years, for example, several
“federated” American nonprofits such as the United Way have begun requiring their local
affiliates to obtain certifications from their lo cal grantee charitable institutions that those
local nonprofits have no ties to terrorism. This is a substantive over-reacti on, but it is to
be expected in a situation in which the government has inspired anxiety and concern
through the application of c ounter-terrorism law and policy to the nonprofit sector.
Likewise, public charities and community foundations have become increasingly
concerned about the possibility that diaspor a donations – gifts by emigrant communities
in the United States earmarked for charitable organizations and causes back in their home
countries through donor advised mechanisms – will inadvertently wind up in terrorist
hands or used for “dual” purposes.
II. Counter-Terrorism, Civil Liberties, and the Enabling Legal and Political
Environment for Civil Soci ety in the United Kingdom
The Framework of Counter-Terrorist Law and Policy and its Impact on Civil
British law and policy with respect to char ities and terrorist finance has, in one
key respect, been consistent with developments in the United States and other countries.
British law allows proscripti on of terrorist organizations, bans support for such
proscribed organizations, helping such organizations arrange or manages meetings to
further their activities. Br itish law also more broadly bans fundraising and making
various kinds of funding arrang ements for “purposes of terrorism”. It also prohibits
retention or control of “terrorist property.”
54 Legal Opinion by Edward Fitzgerald Q.C. an d Caoilfhionn Gallagher, Doughty Street Chambers,
London, in National Council of Voluntary Organisations (NCVO), Security and Civil Society (January
But state policy has gradually expanded to the point that new legislation adopted
in 2006 (the Terrorist Act 2006) criminali zes not only direct support for terrorist
organizations and activities, but “encourag ement,” “glorifying,” and other activities
more closely related to freedom of speech and freedom of association. This seemingly
inexorable expansion of mandates for the charitable sector puts pa rticular pressure on
charitable organizations affiliated wi th certain religious and ethnic groups.
The primary anti-terrorism legislation affecting charities in the U.K. is the
Terrorism Act 2000, which entered into force in February 2001. The Terrorism Act 2000
gives the Secretary of State au thority to proscribe organizations if the Secretary “believes
that it is concerned in terrorism.” “Con cerned in terrorism” is defined broadly as
“commits or participates in acts of terroris m, prepares for terrorism, promotes or
encourages terrorism, or is otherwise concerned in terrorism either in the UK or abroad.”
An organisation may be “any association or combination of persons.” Proscribed
organization membership is illegal, as we ll as assisting, fundraising, providing funds to
such an organisation or any member, or to belong to, support, or display support for a
proscribed organization. All property of a pr oscribed organization may be seized by the
government. Organizations are allowed to apply for de-proscription, and an appeals
process is provided for organiza tions denied de-proscription.
The Terrorism Act 2000 also criminalizes membership in a proscribed
organization (sec. 11); it also criminalizes various forms of support for proscribed
organizations, including the offenses of “inv ites support” (not limited to financial support
for a proscribed organization (sec. 12(1)); “arranges, manages or assists” in arranging
meetings for a proscribed organization (sec. 12(2)); wearing the uniform of a proscribed
organization (sec. 13). More broadly the Terrorism Act 2000 also criminalizes fund-
raising for “purposes of terrorism” (sec. 15); use of money or other property for purposes
of terrorism (sec. 16); undert akes other funding arrangements for purposes of terrorism
(sec. 17); or engages in broadly defined m oney laundering of terrorist property (sec.
In addition, the Charity Commission has the statutory power under the Regulation
of Investigatory Powers Act 2000 and the Se rious Organised Crime and Police Act 2005
55 Terrorism Act 2000, Part II, Sec. 3. See Charity Commission, Operational Guidance: Charities and
Terrorism , OG96-28 (January 2003) (www.charity-commi ssion.gov.uk/tcc/terrorism.asp). A list of
proscribed organizations is provided at the end of OG96-28 Operational Guidance. See also Home
Secretary Moves to Ban 15 Terror Groups, Home Office, Press Office, 10 October 2005
(press.homeoffice.gov.uk/press-releases) (containing a full banning order and additional information).
56 Terrorist Act 2000, Part III, Secs. 14-19.
to “send ‘Covert Human Intelligences Sources’ … i.e. spies or undercover agents, to
work in charities that are under suspicion.” 57
The Role of the Charity Commission: Keep ing Charity Regulators Central in Terrorist
A difference in the British context is that while the American approach to shutting
off terrorist finance from nonprof its largely sidesteps charity regulators in favor of direct
action by prosecutors, the British approach ha s, at least in part, relied as charity
regulators as partners and, often but not always, “first responders” in the antiterrorist
58 The Charity Commission is the central regulator and registrar for charities
in England and Wales, has been key to thes e efforts and has played a core role in
investigating, resolving and where necessary collaborating in prosecuting ties between
charities, terrorism, and terrorist finance. Its central role has been reaffirmed under the
new Charities Act 2006.
Of course, that approach is not the only possible means of attack on this issue.
Charities have been used to funnel funds to ex ternal terrorist groups in Britain as in the
United States and other countries, and the government moved quickly after September 11
to enforce the U.N. resolutions that calle d for freezing funds held by Al Qaeda, the
Taliban and other terrorist groups. So clearly prosecution has an important role to play as
well, and the Charity Commission clearly recognizes that as well.
Charity regulators in the United States – for example, well-informed specialists
in the U.S. Treasury Department’s Exempt Organizations Division – appear somewhat
marginalized in the enforcement of laws ag ainst terrorist financing by charities in the
U.S. because of the structure of nonprofit regulation in the United States, historical
limitations on their roles, and the prosecution-centered nature of antiterrorist law and
policy in the U.S. But their counterparts, char ity regulators in the U.K., appear to play a
more central role than federa l charity regulators in the United States. That different
structure has been to Britain’s advantage in working out a response to the uses of
charities by terrorist organiza tions in the post-September 2001 era that has helped keep
charity regulators directly involved in anti-terrorist policy and activities.
In Great Britain, the key charity regula tor is the Charity Commission, which has
been near the forefront of charity-related terro rism financing investigations since before
57 Legal Opinion by Edward Fitzgerald Q.C. and Caoilfhionn Gallagher, Doughty Street Chambers,
London, in NCVO, Security and Civil Society (January 2007), at www.ncvo-vol.org.uk. Whether
government bodies agree that they have this statutory power has not yet been confirmed.
58 See also the author’s discussion of British approaches to antiterrorism and the nonprofit sector in
Sidel, More Secure, Less Free?
(University of Michigan Press, 2004, revised ed. 2006).
59 For detailed information on the role and functions of the Charity Commission, see https://www.charity-
commission.gov.uk/tcc/ccabout.asp, and, for summary information on the Charities Act 2006,
September 11. The Charity Commission certainly had jurisdiction over investigations of
charitable links to terrorism in England a nd Wales before the September 2001 attacks.
For example, the Commission had alrea dy investigated the North London Central
Mosque Trust (Finsbury Park Mosque), wh ich Sheikh Abu Hamza al-Masri (Abu Hamza)
had taken over in the late 1990s. In that earlier proceeding, after Commission
investigation, the original mosque trustees had reached an agreement with Abu Hamza in
which the trustees would resume “full cont rol of the Mosque and other property” in
exchange for Abu Hamza being permitted to give half of the Friday sermons at the
Mosque (later three out of four sermons).
But Abu Hamza’s control of the Mosque persisted, and the more moderate
trustees were forced to the sidelines until the Charity Commission intervened again. This
was done after 2001 and effectively removed Abu Hamza and returned the Mosque to
proper control. This approach was effectiv e because of the Charity Commission’s wide
investigatory and enforcement powers and its detailed understanding of developments in
the charitable sector including the North London Mosque. In addition, the Commission
had an array of means at its disposal to reso lve charitable failures to abide by the law –
ranging from technical assistan ce and advice to agreements to change practices to, where
needed, orders removing trustees, free zing funds, or closing organizations.
The Charity Commission’s role in this area accelerated after 2001, initially with
an investigation of the U.K.-registered Inte rnational Islamic Relief Organization after a
Times of London report that “the charity was under CIA scrutiny in connection with the
possible transfer of funds which may have been used to support the terrorist attacks in the
United States.” That inquiry was closed a month later after the Commission determined
that the organization had ceased to operate in the U.K. and removed it from the register of
A number of other inquiries have taken place since the September 11 attacks, as
the Commission reaffirmed that “any kind of terrorist connection is obviously completely
unacceptable [and] investigating possible links with terrorism is an obvious top priority
for the charity commission.” But in doing so the Commission also sought to assuage
fears of a witch-hunt: “The good news is that , in both absolute and relative terms, the
number of charities potentia lly involved are small. Neither the charity commission, nor
other regulatory and enforcement organizations have evidence to suggest that the 185,000
charities in England and Wales are wide ly subject to terrorist infiltration.”
The Charity Commission’s role in investig ating charitable links to terrorism has
continued and expanded in recent years. In May 2002, the Commission reported that it
60 Charity Commission, Inquiry Report: North London Central Mosque Trust (2003) (www.charity-
61 Debra Morris, Charities and Terrorism: The Charity Commission Response , International Journal of
Not-for-Profit Law (September 2002) (www.icnl.org).
62 John Stoker, Weeding Out the Infiltrators , The Guardian (U.K.), 28 February 2002.
had “evaluated concerns” about ten charities since the September 11 attacks, “opened
formal inquiries” into five, closed tw o, and frozen the assets of one group. 63 “Vigilance
is everything,” the Commission warned: “Any links between char ities and terrorist
activity are totally unacceptable. Links … might include fundraising or provision of
facilities, but also incl ude formal or informal links to organizations ‘proscribed’ under the
Terrorist Act 2000, and any subseque nt secondary legislation.”
But the Commission also emphasized that its relationship to the charitable sector
was useful in the antiterror battle, and that charities would not be left out of the process.
“[T]he Charity Commission is committed to working with the sector it regulates – to
ensure that terror groups are ne ver allowed to gain a foothold within England and Wales;
185,000 registered charities.” And an important responsibility would continue to fall to
trustees to “take immediate st eps to disassociate” any charity from links to terrorist
activity and to “be vigilant to ensure that a charity’s premises, assets, volunteers or other
goods cannot be used for activities that may, or appear to, support or condone terrorist
activities….” Accountability and transparen cy – not only prosecution – were crucial to
64 and particularly crucial was the ex istence and clear role of the Charity
As investigations continued, more guidance was clearly needed for charitable
organizations. The Commission issued “operational guidance” on “charities and
terrorism” in January 2003 that reaffirmed the Commission’s central role in investigating
alleged charitable links to terrorism and en forcing law and policy with respect to the
sector. The 2003 operational gui dance also reconfirmed the close relationship between
the Commission – through its Intelligence and Special Projects Team (ISPT) – and other
law enforcement, security and intelligence organizations.
65 Later that spring, the
Commission issued guidelines for charities working abroad that focused on the risk that
charitable funds would reach terrorist organizations and did not appear to impose as
many new burdens on charities as thei r American counterpart guidelines.
Throughout this work a recurring them e was the notion that the Commission
should remain at the forefront of work against the use of charities in terrorist financing,
seeking to retain cooperation with the voluntary sector whil e combating terrorism, rather
than ceding that work to security and poli ce organizations. That fit well with the
Commission’s traditional role. As the Co mmission’s annual report for 2002 and 2003 put
63 Charity Commission, Charity Commission Policy on Charities and Their Alleged Links to Terrorism
(May 2002) (www.charity-commission.gov.uk/tcc/terrorism.asp).
65 Charity Commission, Operational Guidance: Charities and Terrorism , OG96-28 (January 2003)
66 Charity Commission, Charities Working Internationally (2003) (www.charity-commission.gov.uk/
it, perhaps in a broader context, the goal was “maintaining out independence and working
with others.” 67
North London Central Mosque (F insbury Park Mosque) (2001-2003)
Investigations have continued. The mo st prominent has been the Commission’s
long engagement with the problems of the North London Central Mosque (Finsbury Park
Mosque) and its radical, anti-American leader until 2004, Sheikh Abu Hamza al-Masri.
Abu Hamza and his followers had taken over th e mosque from more moderate trustees
and were using it for extremist religious a nd political purposes. After the September 11
attacks, the Commission renewe d earlier investigations of the mosque and Abu Hamza’s
role upon receiving tapes of sermons that were “of such an extreme and political nature
as to conflict with the charitable status of the Mosque” and investigatory report of a
“highly inflammatory and political conference” at the mosque on the first anniversary of
the World Trade Center and Pentagon attacks.
In cooperation with police and security agencies and with the support of the
mosque’s original trustees, in a 2003 d ecision the Commission suspended Abu Hamza
from his position within the mosque, fro ze mosque accounts controlled by Abu Hamza
and in February 2003 removed him from all posit ions in the mosque. At the same time
the London police secured the mosque and hand ed it back to the original trustees.
undertaking this complex task the Charity Commission was aided by the wide array of
powers at its disposal. These powers incl uded freezing funds, appointing substitute
trustees and auditors, ordering specific activit ies or organizations shuttered for periods of
time, and other measures. The Commission was also assisted by its detailed knowledge of
the Mosque gained through a number of years of charity enforcement.
In May 2004, U.S. Attorney General Ashcroft unsealed an eleven count
indictment charging Abu Hamza with conspiracy to provide material support to terrorists,
assistance to a 1998 bombing in Yemen and ot her offenses. The British authorities
arrested Abu Hamza at the request of the U.S. government and prepared to extradite him
to the United States. In 2006 Abu Hamza wa s sentenced to seven years imprisonment in
the U.K. for counseling mu rder and racial hatred.
Society for the Revival of Islamic Heritage (2002)
67 Charity Commission Annual Report 2002-2003.
68 Charity Commission, Inquiry Report: North London Central Mosque Trust (2003) (www.charity-
commission.gov.uk/news/mosqueinq.asp); British Arrest Radical Cleric U.S. Seeks, New York Times
May 2004. See also extensive coverage of the Abu Hamza case in British newspapers, especially The
Times (London) and The Guardian , in May and June 2004. For a sense of the different atmosphere at the
mosque in 2005, see At Mosque That Recruited Radicals, New Imam Calls for Help in Catching Bombers ,
New York Times
, 9 July 2005.
69 Abu Hamza Convicted , The Guardian (London), 8 February 2006. Such a prosecution might be more
difficult in the United States b ecause of speech protections.
The Charity Commission conducte d a number of other investigations into alleged
charitable links with terrorism, not all with similarly dramatic conclusions. A 2002
inquiry into the Society for the Revival of Islamic Heritage was prompted by notice that
the U.S. Treasury Department had issued a bl ocking order against a group with a similar
name that had offices in Pakistan and Afghani stan, and that the U.S. government believed
that that the group “may have financed a nd facilitated the activities of terrorists …
through Usama Bin Laden.” After investiga ting possible ties between the organization
registered in London and the group proscrib ed by the United States, the Commission
found no evidence linking the U.K. charity with the U.S.-banned group, a
nd closed its
Minhaj-Ul-Quran UK and Idar a Minhaj-Ul-Quran UK (2002)
Another inquiry was launched in 2002 after allegations that the London-based
Minhaj-Ul-Quran UK and Idara Minhaj-Ul-Qur an UK was “supporting political activities
in Pakistan.” There were also allegations that the records kept at the Charity were poor
and that its financial controls were weak. After investigation, the Commission cleared
the charity of the political support allegatio ns that had been made against it. The
Commission did, however, order the group to strengthen accounting controls, and
reached an agreement with the trustees on new controls.
71 This case demonstrates the
Commission’s ability to investigate both a char ity’s internal functions, as well as whether
it has improper ties.
Divergence from the United Stat es: The Interpal Case (2003)
In response to a U.S. allegation that funds from the Palestinians Relief and
Development Fund (Interpal) were going to Hamas, the Commission contacted Interpal in
April 2003 to determine whether Interpal funds had gone for “political or violent militant
activities” of Hamas in Palestine. This fo llowed on a 1996 investigation of Interpal that
had found “no evidence of inappropriate activit y, and the information available indicated
that Interpal was a we ll-run organization.”
The initial 2003 investig ation by the Commission f ound that Interpal had
“improved its procedures and record keeping since the Commission’s previous Inquiry,
70 Charity Commission, Trustees Have No Link with Terrorism (Press Release PR94/02), 5 November
2002 (www.gnn.gov.uk/environm ent/detail.asp?ReleaseID=31330&NewsAreaID=2& NavigatedFrom
Department=True). Unfortunately we do not know with certainty whether the Commission found no
evidence, or no evidence that rose to a useable or probative level. The Commission is required to maintain
confidentiality of sensitive security information.
71 Charity Commission, Inquiry Report: Minhaj-Ul-Quran UK , 2002 (www.charity-commission.gov.uk/
inquiryreports/m inhaj.asp); and Inquiry Report: Idara Minhaj-Ul-Quran UK , 2002 (www.charity-
although these procedures could be further enhanced by introducing a greater degree of
independent verification of the work done by Interpal’s partners in the region on its
behalf.” The Inquiry also turned up evidence that Interpal had received funds from an
organization proscribed under U.N. sanctio ns in May of 2003, the Al-Aqsa Foundation,
though “the funds received were in respect of humanitarian work already carried out by
Interpal and then invoiced” to Al-Aqsa.
While the Commission’s Inquiry was underway, the U.S. government formally
named Interpal as a “specially designated gl obal terrorist” organization and proscribed its
activities in the United States “for allege dly supporting Hamas’ political or violent
militant activities.” The Commission immedi ately opened a formal Inquiry under section
8 of the Charities Act 1993 and froze Interpal ’s accounts “as a temporary and protective
measure.” The Commission also requested “e vidence to support the allegations made
against Interpal” from the United States, but, according to an understandably limited
report from the Commission, the U.S. was “unable to provide evidence to support
allegations made against Interpal within the agreed timescale.”
In late September, the Commission decided “in the absence of any clear evidence
showing Interpal had links to Hamas’ political or violent militant activities” that
Interpal’s accounts woul d be unfrozen and the Co mmission’s Inquiry closed.
The Interpal Inquiry also enabled the Co mmission to reassert that it will “deal
with any allegation of potential links betw een a charity and terrorist activity as an
immediate priority … liais[ing] closely with relevant intelligence, security and law
enforcement agencies to facilitate a t horough investigation.” The Commission also
reemphasized that “as an independent statut ory regulator the Commission will make its
own decisions on the law and facts of the case.”
The British bank NatWest has also b een sued by people wounded in suicide
bombings in Israel or their relatives, in cases where Hamas has claimed that it carried out
the bombings, based on claims that NatWest sent funds through accounts held by Interpal
to Hamas. NatWest called the suit “without merit,” contested it in New York, and said
that the Charity Commission had “found no ev idence of wrongdoing” by Interpal in the
1996 and 2003 inquiries.
74 In September 2006 a federal judge in New York denied
NatWest’s motion to dismiss the suit, allowing it to continue. 75
72 From the Commission reporting on this matter is it not clear if the issue was that there was no evidence
or that the United States was unwilling to disclose the intelligence that it might have had.
73 Charity Commission, Inquiry Report: Palestinians Relief and Development Fund , 2003 (www.charity-
74 Victims of Bombings in Israel Seek Damages in New York , New York Times , 7 January 2006; Hurt by
Hamas, Americans Sue Banks in U.S. , New York Times
, 15 April 2006.
75 NatWest Loses First Round in Court Case over Charity Linked to Hamas , The Guardian (London), 29
Tamils Rehabilitation Organisation (2000-2005)
In September 2000, the Charity Commission opened an Inquiry into the Tamils
Rehabilitation Organisation (TRO), after al legations that TRO was “supporting terrorist
activity by transferring funds to Sri Lanka in support of the Liberation of Tamil Tigers of
Elam (LTTE),” a proscribed organization under the U.K. Terrorism Act 2000 and under
many other nations’ laws as well. TRO worked by providing funds to the Tamils
Rehabilitation Organisation Sri Lanka (TRO SL ), and it appeared that some of those
funds might be making their way to the Tigers.
After receiving information that the char ity’s “funds might be at risk,” the
Commission restricted payments from TR O accounts under section 18 of the Charities
Act (a step short of a comple te freeze on the use of assets), and then found inadequate
financial controls, lack of operational tr ansparency, and evidence of mismanagement
during its investigation. “The Trustees exercised little or no control over the application
of funds in Sri Lanka and failed to demonstrat e a clear audit trail relating to expenditure.
They also failed to provide the Commission w ith any explanation as to the provenance of
some of the funds received from the US and Canada. The Commission therefore
concluded that the Charity’s property was at risk,” and appointed a prominent London
lawyer as TRO’s interim mana ger under the Charities Act.
The interim manager’s tasks were indeed broad – in addition to managing the
entire charity, he was charged with “establishi ng whether it was able to operate lawfully,
in the manner intended by the Trustees, in pr oviding charitable relief to Sri Lanka in
circumstances of civil unrest” “and “required to ascertain the extent of the risk that funds
had been, or would in the future be, r eceived by any organisation proscribed…” and
“making recommendations for the Charity’s future.”
The interim manager, Don Bawtree of BD O Stoy Hayward, determined that the
Trustees could not account for funds and “w ere not administering the charity to an
acceptable standard.” He commissioned a Sri Lankan firm to trace funds from TRO to
TRO SL and onward to charitable activitie s in Sri Lanka, and that investigation
determined that “TRO SL liaised with the LTTE in determining where funds could be
applied.” Funds donated “were used for a va riety of projects which appeared to be
generally humanitarian, but not necessarily charitable in English law nor in line with the
Charity’s objects.” The manager sought to find an NGO willing to work with TRO in
finding appropriate projects and monitoring them effectively, but could not find an NGO
willing to take this task on.
The interim manager then set up a separate new charity, the Tamil Support
Foundation, in which he and the Commissi on could have confidence that legal
obligations were being met. The plan was to transfer funds from the TRO to this new
charity. (This seemingly extraordinary power is contemplated in the Commission’s
authorizing legislation and app ears to be unquestioned in Britain.) Then the tsunami hit
Sri Lanka and other countries in Decemb er 2004, and the manager decided to donate
most of TRO’s assets to tsunami relief through recognized charities, as well as to transfer
some funds to the new Tamil Support Foundation. By August of 2005 TRO had no funds
left because they had all been transferred to legitimate organizations working on tsunami
relief or to the new, safeguarded Tam il Support Foundation. TRO ceased to operate, it
was removed from the Register of Charities, and the Commission discharged the interim
From the perspective of the Commission, the results of this long and complex
process were entirely positive: “The appoi ntment of the Interim Manager protected the
Charity’s funds at the time when he took control of its bank accounts, by preventing them
from being applied in a manner that was unaccountable….Through the setting up of the
Tamil Support Foundation, the Interim Mana ger secured another vehicle for those
wishing to support the Tamil speaking people.”
New Initiatives Against Terrorist Financing through Charities, 2006-2007
The July 2005 bombings in London and charges of other links between British-
based charities and terrorist abroad have brought renewed pressure to clamp down on
terrorist networks and their financing. Intelligence and police activities, raids and
detentions have increased dramatically, and the British government has proposed new
measures on terrorist finance that could well aff ect the charitable sector in the U.K. And
the U.K. is under continuing, perhaps increasing pressure from other countries –
including the U.S., Israel, Russia and othe rs – to control terrorist finance through
In February 2006 the United Nations added several more individuals resident in
the United Kingdom, three companies and a re lated charity based in Birmingham, the
Sanabel Relief Agency, to its list of intern ationally proscribed individuals and groups
linked to terrorism. Sanabel and the indivi duals and companies were allegedly linked to
an al-Qaeda-affiliated group called the Libyan Islamic Fighting Group.
77 The Charity
Commission immediately opened an investigation as well and, it became clear later,
British authorities either began or conti nued intensive surveillance of the group.
In February 2006, Gordon Brown MP a nnounced that the government would
conduct a new review of measures to combat th e use of charities in terrorist finance and
would establish a new intelligence center to investigate terrorist financing networks
around the world and their impact on Great Br itain. “[C]ut[ting] off the sources of
terrorist finance … requires an international operation using modern methods of forensic
accounting as imaginative and pathbreaking for our times as the Enigma codebreakers at
Bletchley Park achieved more than half a century ago.” At the same time, the
76 All quotations in this s ection are from Charity Commission, Inquiry Report: Tamils Rehabilitation
Organisation , 2005 (www.charity-commission.gov.uk/investigations/inquiryreports/tamils.asp).
77 Man Denies Terror Link after Assets Freeze , The Guardian (London), 9 February 2006.
government announced that it had frozen 80 million pounds of terrorist funds since
September 2001 involving more than a hundred organizations. 78
In May, more than 500 British police raided nineteen locations around England in
London, Bolton, Birmingham, Middlesborough, Li verpool and Manchester against
individuals and organizations suspected of funneling financial assets to terrorist
organizations abroad. “At the center of the raids,” according the The Guardian
Sanabel, whose offices were entered and one of whose trustees, Tahir Nasuf, was arrested
under the Terrorism Act 2000.
Also in May, Israel called the British- based charity Islamic Relief a “front for
terrorists” involving the “transfer [of] funds and assistance to various Hamas institutions
and organizations.” The charges raised bilate ral issues between Israel and Great Britain
because Britain finances Islamic Relief’s heal th and other work in Gaza and elsewhere.
Islamic Relief denied the charges and said that Israel appeared to have confused several
of its sub-grantees with groups tied to Ha mas. And the U.K. government overseas aid
group that funded Islamic Relief, the Department for International Development, said
“[w]e have no reason to believe that the allegations are true.”
In the summer of 2006, after British author ities uncovered a plot to blow up
airliners traveling between Britain and the United States and detained 25 people. A
British-based charity called Jamaat ud Dawa (Association of the Call to Righteousness)
and a smaller, family-run charity named Crescent Relief came under investigation for
possible diversion of earthquake relief funds to terrorist groups that had planned to carry
out the airliner attacks. The funds were re ported to have come directly from the British
organization or individuals linked to it.
News reports linked Jamaat ud Dawa – which is on the U.S. proscription lists – to
Lashkar-e-Taiba, a terrorist group banned by both the U.S. and Pakistan. New reports
made clear that Jamaat ud Dawa and indivi duals linked to it had been under intensive
surveillance for some time.
A Charity Commission inve stigation was immediately
launched as well, with its focus on Crescent Relief. 81
78 Modern-Day Bletchley Park to Tackle Terror Finance Networks , The Guardian (London), 11 February
79 Ten Held in Police Counter-Terr or Raids Over Claims of Chanelling Cash to Iraq Insurgency , The
Guardian (London), 25 May 2006.
80 Israel Accuses British-funded Islamic Charity of Being Front for Terrorists , The Guardian (London),
31 May 2006.
81 Pakistani Charity Under Scrutiny in Financing of Airline Bomb Plot , New York Times , 14 August
2006; Terror Plot , The Guardian
(London), 15 August 2006; In British Inquiry, a Family Caught in Two
Worlds , New York Times
, 20 August 2006; Arrest: Father of Airline Attack Suspects is Held in Pakistan ,
(London), 21 August 2006; British Study Charitable Organization for Links to Plot , New
York Times , 25 August 2006; In Tapes, Receipts and a Diary, Details of the British Terror Case , New
York Times , 28 August 2006.
All these events sparked more intensive focus on charitable links to terrorism and
their role in terrorist finance, especially links involving Islamic charities. As the New
York Times reported from London in August, “the question is being asked here, with
more urgency: To what extent to Muslim charities – on the surface noble and selfless –
mask movements and money for terrorists a nd extremist groups?” And events in 2005
and 2006 highlighted the different approaches – in some cases divergent approaches –
taken by American and British authorities on charities and terrorist finance and on
charities that had come under suspicion.
“Since Sept. 11,” the Times continued, “American officials have banned many
charities that still operate fr eely in Britain, reflecting a disagreement about where charity
ends and extremism begins.” And increas ingly American officials and commentators
were critical of the process-based British approach, calling the Charity Commission and
other British instit utions “too lax.”
All agreed that “the British showed signs of
hardening, particularly after four bombers ki lled 52 people on buses and trains here on
July 7 of last year.”
In the wake of the airline bomb plot arre sts, the government reconfirmed that the
Home Office and Treasury Depa rtment are reviewing the problem of terrorist finance
through charities and intend to recommend legal and policy changes. “We are aware that
existing safeguards against terrorist abuse in the charitable sector need to be
strengthened,” a Home Office official told the New York Times.
83 The National Council
of Voluntary Organizations (NCVO) also convened a panel to report on issues of
charities and terrorist finance, concerned that the Home Office and security review would
not be sufficiently consultative.
The investigations continued into the fall, including a widespread investigation of
alleged “jihadists” that culminated in th e arrest of fourteen people in London in
September. They had allegedly been traini ng for terrorist activities, including possibly at
an independent school owned and run the by charitable group Jameah Islamiyah, which
came under investigation by the Charity Co mmission as well in the fall of 2006.
In October 2006, the government began announcing some of its new measures to
crack down on terrorist financing. Chancel lor Gordon Brown and Economic Secretary
Ed Balls stressed “closer cooperation between America and Europe,” and said that the
U.K. government would now “use classified intelligence to freeze assets of those
suspected of having links to terrorism” and “allow law enforcement agencies to keep
their sources of information secret after it is used to track down and freeze bank
82 Airplane Terrorism Case Prompts Questions About the Work of Islamic Charities in Britain , New
York Times , 24 August 2006.
83 British Study Charitable Organization for Links to Plot, New York Times , 25 August 2006.
84 Police Search Islamic School on Expansive Estate in South Britain , New York Times , 4 September
2006; Training Camps Link to Anti-Terror Arrests , The Guardian
(London), 4 September 2006.
accounts.” The government would also seek preemptive authority to halt terrorist
financing. The inquiry on chari ties and terrorist finance continued. Brown also proposed
new and inevitably controversial reforms to Br itain’s terrorist law, including giving the
government the power to detain terrorist su spects for longer than the current 28 days.
The Terrorism Act 2006 adds to the array of counter-terro r enactments in the U.K.
since September 11, particularly the Terrori sm Act 2000 and the Anti-Terrorism, Crime
and Security Act 2001. It may affect charitie s because it expands the terrorist criminal
offenses to include acts preparatory to te rrorism; directly or indirectly inciting or
encouraging others to commit terrorism, incl uding the “glorification” of terrorism; the
sale, loan or other dissemination of publica tions that encourage terrorism or provide
assistance to terrorists; and anyone who gives or received training in terrorist techniques,
including mere attendance at a terrorist training site. The Terrorism Act 2006 also
increases the scope of proscription for terr orist organizations, providing the government
with authority to proscribe organi zations that “glorify terrorism.”
As of fall 2006, 42 organizations had been proscribed in the U.K. under the
Terrorism Act 2000, 14 organizations were pros cribed in Northern Ireland under earlier
law, and under the new authority given to proscr ibe organizations that glorify terrorism in
the Terrorism Act 2006, two such organizations had been banned.
The Home Office and Treasury Review, and the Charity Commission’s Defense of its
In January 2007, in advance of the rel ease of a long-awaited Home Office and
Treasury review of charities, terrorist finance, and the role of the Charity Commission in
counter-terrorism law and policy, the Nati onal Council of Voluntary Organisations
(NCVO) released its own report on charities and terrorist finance, Security and Civil
Society . The report criticized moves toward strengthening the U.K. legal regime for
prosecuting charities and called on the government to view charities as an ally in the fight
against terrorism rather than as an adversary. The report also pointed out the fundamental
sufficiency of the existing legal regime wh ile also recognizing some problems, and it
criticized the impact of some government actions in this arena on charitable activities in
the UK and abroad, particularly with respect to Muslim organizations.
85 U.K. Unveils Plan to Freeze Terror Funds , Associated Press, 10 October 2006; Brown to Use
Classified Intelligence in Fight to Cut Terrorist Funding , The Guardian
(London), 11 October 2006.
86 Home Office, Counter-Terrorism Strategy, Terrorism Act 2006 (security.homeoffice.gov.uk/counter-
87 Home Office, Counter-Terrorism Strategy (security.homeoffice.gov.uk/counter-terrorism-strategy);
Home Secretary Moves to Ban 15 Terror Groups , Home Office, Press Office, 10 October 2005
(press.homeoffice.gov.uk/press-releas es, containing a full banning order and additional information).
88 NCVO, Security and Civil Society (January 2007) (www.ncvo-vol.org.uk).
The Home Office and Treasury review of charities and terrorist finance was
released in May 2007. The review called for tightened coordination between the
Charities Commission and government agencies dealing with terrorism and terrorist
finance, a more prosecution-based appr oach by the Charity Commission, increased
funding focused on prosecutions and investigat ions rather than on improved governance
in the sector, and other measures.
The Charity Commission released its fo rmal response to the Home Office and
Treasury Review in August 2007, providing plan s to accelerate its work on terrorist
finance and strengthen coordi nation with government agencies. The Charity Commission
also sought to safeguard the independence of its work and structure, and its role in
cooperating with the charitable sector to strengthen governance and accountability.
The Charity Commission spoke clearly: “The Commission will continue to …
take a balanced approach which is evidence – and risk-based, targeted and proportionate;
… work in partnership and collaboration with government and the charity sector itself; …
and … maintain its strategic and operationa l independence in line with its statutory
91 The Commission re-emphasized its view that effective regulation involves
putting a strong emphasis on giving support a nd guidance to charities to prevent
problems and abuse occurring in the first place; … we believe that the most effective way
for the sector to minimize its exposure to the risk of terrori st abuse is through
implementing strong governance arrangement s, financial management and partner
management. Charities which implement good general risk management policies and
procedures will be better safeguarded against a range of potential misuses.”
Lessons of the Experience in the United Kingdom
The English experience shows the value of continuing to have sophisticated
charity regulators play a central role in investigating charitable links to terrorism and
terrorist finance, including main taining legal authority over these issues in the charity
regulator. The Charity Commission has played an exceptionally useful role in England in
cooperation with police and secur ity forces, bringing to bear a detailed knowledge of the
sector and of individual ch aritable organizations based on years of reporting and
experience. The Charity Comm ission conducts investigations, gathers information that it
89 The Home Office and Treasury Review is at www.homeoffice.gov.uk/documents/cons-2007-
90 See Charity Commission, The Home Office and HM Treasury’s Revi ew of Safeguards to Protect the
Charitable Sector (England and Wales) from Terrorist Abuse: The Charity Commission’s Reponse to the
Consultation (August 2007), at www.charity-commission.go v.uk/supportingcharities/terror.asp. Other
responses to the Home Office and Treasury Review are at www.homeoffice.gov.uk/documents/cons-2007-
91 Section 3.2 of the Charity Commission’s Response, supra.
shares as relevant with other agencies, and may take measures to require organizations to
substitute trustees, improve accounting and disbursement, or other reforms.
This maintenance of a central role for a charity regulator, combined with the
intensive focus on a small number of organizat ions suspected of terrorist finance links,
has arguably resulted in both better targeting and better information for British law
enforcement than for some of its internati onal counterparts. The British situation
contrasts with Australia, wher e anti-terrorism laws have been adopted that clearly could
apply to the charitable sector, but have not yet been applied, and with the U.S.
prosecution-centered approach. The approach taken in the United States and Australia
will be discussed below.
III. Counter-Terrorism, Civil Liberties, and the Enabling Legal and Political
Environment for Civil Society in Australia
The Framework of Counter-Terrorist Law and Policy and its Impact on Civil
In contrast with the United Kingdom a nd the United States, Australia had very
little experience with terrorism within its borders before the September 11 attacks and
thus very little specifically an ti-terrorist legislation on its books.
After the September 11 attacks, the gove rnment tightened domestic surveillance
of suspected terrorists and introduced a number of anti-terrorism bills in the Australian
parliament that, in general terms, sought to enhance government power in the anti-
terrorism arena by vesting a dditional discretion and power in the Australian federal
attorney general. Those bills included the Security Legislation Amendment (Terrorism)
Bill, Suppression of the Financing of Terrorism Bill, Criminal Code Amendment
(Suppression of Terrorist Bombings) Bill, Bo rder Security Legislation Amendment Bill,
and Telecommunications Interception Le gislation Bill, all introduced in 2002.
The initial legislative proposals elicited widespre ad and broad opposition in
Australia, including civil liberties groups and parliamentarians who argued that much of
what the government wanted to re-crimi nalize through specialized anti-terrorist
legislation was already effectively crimina lized and handled through existing criminal
95 Opponents forced some changes in the orig inal set of bills adopted in the wake of
93 Christopher Michaelsen, International Human Rights on Trial: The United Kingdom’s and Australia’s
Legal Response to 9/11 , 25 Sydney Law Review
275-303 (2003). An earlier and shorter treatment of the
Australian scene is in Sidel, More Secure, Less Free?: Antiterrorism Policy and Civil Liberties after
September 11 (University of Michigan Press, 2004, and 2006 revision).
94 David Kinley and Penny Martin, International Human Rights Law at Home: Addressing the Politics of
Denial , 26 Melbourne University Law Review
466-77, 471 (2002).
95 For a clear expression of this view, see, e.g., Chris Maxwell, September 11 and Its Aftermath:
Challenges for Lawyers and the Rule of Law (Address to Maddock Lonie and Chisholm law firm, 15 April
the September 11 attacks. The very broad proposed definition of “terrorist act” in the
government’s initial proposal was narrowed to require some element of intentional
intimidation or coercion. And the government ’s attempt to reverse the presumption of
innocence in terrorism cases, requiring detainees to prove that they were not terrorists,
The initial wave of legislative activ ity continued in 2003, when the government
proposed the Australian Security Intell igence Organisation Legislation Amendment
(Terrorism) Act 2003 (the ASIO Act), which was primarily intended to enable Australian
security organisations to detain terroris m suspects or persons who might have some
knowledge of potential terrorist activities and to criminalize “withholding of information
96 This bill also elicited very strong opposition, delaying passage
for more than a year, and resulting in soften ing to protect children in detention, adding
sunset clause, and other changes. a
In 2003 and 2004 the government continued to press for statutory amendments to
provide for closed trials fo r defendants charged with national security offenses, and
clearances for lawyers, limited public acces s, and limited media coverage of certain
national security trials, as well as authority to deny terrorism suspects bail and allow
police to hold some detainees for terroris m-related question for twenty-four hours, a
substantial increase from the f our hour limit under current law.
In 2005 the Australian government pr oposed new and tougher anti-terrorism
legislation that would expand the definition of terrorist organizations to include advocacy
within the proscribable range , expand the government’s powers to use “control orders”
and preventive detention agains t a widened range of suspects, and strengthen the crime of
98 The proposed expansion in government powers continued to be severely
criticized by civi l liberties groups. 99
Civil Society, Charities and Terrorist Finance
Within the framework of new and expande d anti-terrorist lawmaking in Australia
there has been some attention to the problem of terrorist finance – and within that rubric,
some, but not extensive, attenti on to the issue of charitable conduits for terrorist finance.
Among the laws passed in 2002 was the Suppression of the Financing of Terr
96 Michaelsen, International Human Rights on Trial , supra note 8, p. 281.
97 These developments are discussed more fully in Sidel, More Secure, Less Free , pp. 156-62.
98 See Prime Minister’s Officer, Counter-Terrorism Laws Strengthened , 8 September 2005, at
www.pm.gov.au; Civil Rights Network, The Anti-Terrorism Bill (No 2) 2005 (Cth) ,
www.civilrightsnetwork.org. Th e text of the draft is at www.chiefminister.act.gov.au/docs/
99 ‘Appalling’ Anti-Terroris m Laws Draw Criticism, ABC News Online, 27 September 2005.
2002, which was intended to provide Australian implementation of the International
Convention for the Suppression of the Financing of Terrorism and to “starve terrorists of
assets and funds in order to re duce their capacity to operate.”
The Financing of Terrorism Act amends Australia’s general Criminal Code by
criminalizing “the provision or collection of funds to facilitate a terrorist act.” The
Financing of Terrorism Act also provides, as McCulloch and colleagues explain, that
“cash dealers and financing institutions to repo rt suspected terrorist-related transactions,”
“provide a penalty for using the assets of thos e allegedly involved in terrorist activities,”
“streamline the process for disclosing fina ncing transaction information to foreign
countries,” and “allow for the freezing of a ssets of proscribed persons and entities.”
The Australian financing of terrorism regi me implicates charities in a number of
ways – through potential penalties on i ndividuals and on organizations, including
proscription of organizations, fo r a range of acts. Charities and individuals in charities
could in some cases be charged with various terrorist and terrorist financing offences. In
specific terms, as a result of post-September 11 legislation, the Australian Criminal Code
criminalizes committing a terrorist act (subsection 101.1), providing or receiving training
connected to terrorist acts ( 101.2), possessing things connected with terrorist acts (101.4),
collecting or making documents likely to facilitate terrorist acts (101.5), other acts done
in preparation for or planning for terrorist acts (101.6), directing the activities of a
terrorist organisation (102.2), membership i n, recruiting for, providing or receiving
training in connection with a terrorist or ganisation (102.3, 102.4, 102.5), getting funds to,
from or for a terrorist organisation (102.6), providing support to a terrorist organisation
(102.7), associating with a terrorist organisatio n (102.8), with separate additional offenses
for financing terrorism or a terrorist (103.1, 103.2). Individu als connected to charitable
organizations may also be subject to the contro l orders or preventative detention provided
in subsections 104 and 105 of the Code.
Some of the few commentators on this le gal regime raised challenging questions.
McCulloch and colleagues, for example, suggest that “[i]ncre ased regulation and
surveillance of non-profit organisations a nd charities may undermine the ability of
legitimate organisations to ope rate effectively in addition to curtailing their political
independence. The flexibility of the defi nition of terrorism and the ease with which
governments can deem organisations ‘terrorist’ for the purpose of freezing assets may
100 Jude McCulloch, Sharon Pickering, Rob McQueen, Joo-Cheong Tham and David Wright-Neville,
Suppressing the Financing of Terrorism , 16 Current Issues in Criminal Justice
71-78 (2004). See also Jude
McCulloch and Sharon Pickering, Suppressing the Financing of Terrorism: Proliferating State Crime,
Eroding Censure and Extending Neo-colonialism , 45 British Journal of Criminology
101 McCulloch et al, id., also citing M Tan, Money Laundering and the Financing of Terrorism , 14(2)
Journal of Banking and Finance Law and Practice
result in some politically inconvenient or dissident charities and non-profit organisations
being labeled terrorist organisations.” 102
The workings of this legisl ation in practice have also raised concerns. Under the
legislation discussed above and the Charter of United Nations Act 1945 (Cth), for
example, the Liberation Tigers of Tamil Eela m (LTTE) had been proscribed in Australia,
making it a criminal offense to donate, provid e funds or deal in the assets of the
proscribed group, regardless of purpose, including humanitarian assistance. “This is of
grave concern,” wrote one of Australia’s le ading civil liberties organizations, Liberty
Victoria, “especially given th at the Australian Federal Police has acted upon this listing
by raiding Tamil Co-ordinating Committee of Australia in November last year….The
effect of these raids has been to generate fear amongst the Sri Lankan Tamil communities
The Report of the Security Legislatio n Review Committee (SLRC), released in
June 2006, picked up on these criticisms a nd expanded them. The SLRC specifically
criticized portions of the anti-terrorism amendments to th e Criminal Code that “appear to
have a disproportionate effect on human rights and could be subject to administrative law
104 The SLRC recommended that these pr ovisions be repealed or changed.
The problematic legal provisions include 105 :
1. Process for proscription
. The SLRC called for revamping “the process for
proscribing and organization as a terrorist organisation” under Criminal Code subsection
101.2, noting that
“no sufficient process is in place that would enable persons affected by such
proscription to be informed in advance th at the Attorney-General is considering
whether to proscribe the organisation, and to answer the allegation that the
organisation is a terrorist organisation. A consequence of proscription is that, on
account of their connection with th e organisation, persons become upon
proscription liable to criminal prosecuti on. In that prosecution the defendant
cannot deny that the proscribed organisation is a terrorist organisation or for that
matter ‘an organisation’. All members of the SLRC believe that a fairer and more
transparent process should be devised for proscribing an organisation as a terrorist
102 McCulloch et al, supra note 17. On Australian constitutional issues with this legislation and its
impact, see Joo-Cheong Tham, Possible Constitutional Objections to the Powers to Ban ‘Terrorist’
Organisations , 27 University of New South Wales Law Journal
103 Liberty Victoria submission on the Anti-M oney Laundering and Counter-Terrorism Financing Bill
2006 (Cth), 10 December 2006.
104 Report of the Security Legislation Review Committee (June 2006), p. 4, available at www.ag.gov.au/
www/agd/agd.nsf/Page/National_securityReviewsS ecurity_Legislation_Review_Committee. For the
detailed recommendations, see pp. 8-16.
105 Separate citations are not provided for each section below; all these recommendations and the specific
quotations are found at id., pp. 3-16. Individual citations available on request.
The SLRC recommended that the proscription process be improved either by
enhancing the protective and notice aspect s of executive proscription, or by making
proscription a judicial process with notice, service and a judicial hearing. The grounds
for proscription were broadened in 2005 to include organizations that advocate the doing
of a terrorist act.
2. Advocating terrorist acts
. The SLRC noted that “advocating the doing of a
terrorist act is one of the grounds for pros cription of an organisation as a terrorist
organisation,” and called for the deletion of a portion of the broad definition of
“advocates” in section 102.1(1A) in the Criminal Code that creates liability for “directly
prais[ing] the doing of a terrorist act in circumstances where there is a risk that such
praise might lead a person to engage in a terrorist act.”
106 The SLRC called that
provision “on its face, broad and potentially far-reaching.” If its deletion were not
possible, the SLRC stated that “the para graph should be more tightly defined and
changed to require that the ri sk be a substantial risk.”
. The SLRC also directly criticized the offence of “associating
with terrorist organizations” that was added to the Australian Criminal Code in 2004.
“On its face, this offence transgresses a fundamental human right – freedom of
association – and interferes with or dinary family, religious and legal
communication….[S]ection 102.8 should be re pealed. The interference with
human rights is disproportionate to a nything that could be achieved by way of
protection of the community if the section were enforced….[T]he most important
feature of the section – making it an offe nce to provide support to a terrorist
organization with the intention that the support assists the organisation to expand
or to continue to exist – can be achieved by a new offence that does
not rely on
association between the person charged and anyone else.”
4. Strict liability
. The SLRC called for the repeal or amendment of several
Criminal Code subsections applying strict liability (punishment without proof of fault – a
concept quite similar to abso lute liability in Canada).
5. Definition of terrorist act
. The SLRC recommended that the definition of
“terrorist act” in the Criminal Code also be amended by “omitting all reference to ‘threat
of action’. Its place in the definition causes uncertainty and is unnecessary.” The SLRC
recommended a separate offence for “threateni ng action” or “threat to commit a terrorist
act” if that would c onsidered necessary.
The SLRC concluded that “the amendmen ts … recommended to the proscription,
advocacy, association and strict liability elements of Part 5.3 of the Criminal Code would
contribute to a reduction in fear and sense of alienation by at least some Muslim and Arab
106 Here the SLRC is paraphrasing rath er than directly citing section 102.1(1A).
Australians. By doing so, there will be an enhancement, not a diminution, of anti-
. The SLRC also recommended that the provision of the Criminal
Code that criminalizes “training a terroris t organisation or receiving training from a
terrorist organisation” be amended to “make it an element of the offence either that the
training is connected with a terro rist act or that the training is such as could reasonably
prepare the organisation, or the person receiving the training, to engage in, or assist with,
a terrorist act,” and that the offence s hould not be a strict liability offence.
7. Funding to, from or for a terrorist organisation
. The SLRC recommended that
the current broad offence of “getting funds to, from or for a terrorist organisation” under
subsection 102.6 should “not apply to the person ’s receipt of funds from the organisation
… solely for the purpose of the provision of … legal representation … or assistance to
the organisation for it to comply with … law….”
8. Providing support to a terrorist organization
. The SLRC recommended that
the support offence “be amended to ensure that the word ‘support’ cannot be construed in
any way to extend to the publica tion of views that appear to be favourable to a proscribed
organization and its stated objective,” reflecting freedom of expre ssion concerns about
the breadth of the support proscription.
Contrasted with the warnings and limitations suggested by the Security
Legislation Review Committee, the new An ti-Money Laundering and Counter-Terrorism
Financing Act, adopted in 2006, will potential ly increase the impact on the Australian
charitable sector. The Act is intended to bring Australia into compliance with the
Financial Action Task Force (FATF) standards.
107 primarily affects “financial and gambling sectors, bullion dealers and
lawyers/accountants (but only to the extent that they provide financial services in direct
competition with the financial sector – legal professional privilege will still apply) who
provide designated services,” and will be expa nded to include further coverage of “real
estate agents, jewellers, lawyers and accountan ts.” The Act’s definition of “designated
services” covers “a wide range of financ ial services including opening an account,
accepting money on deposit, making a loan, issuing a bill of exchange, a promissory note
or a letter of credit, issuing a debit or stored value card, issuing traveller’s cheques,
sending and receiving electronic funds transf er instructions, making money or property
available under a designated remittance arrangement, acquiring or disposing of a bill of
exchange, promissory note or letter of credit, issuing or selling a security or derivative,
accepting a contribution, roll-over or transfer in respect of a member of a superannuation
107 The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is at www.comlaw.gov.au/
the Explanatory Memorandum is at www.comlaw.gov.au/comlaw/legislation/bills1.nsf/bills/bytitle/
fund and exchanging currency.” 108 It is thus possible that a charitable or other
organization undertaking such services would fa ll within the purview of the Act, perhaps
for accepting a contribution, or sending EFT in structions, even if it is not a designated
target of the legislation.
Thus, according to a close Australian observe r of this sector and the legislation,
“funds received from this [charitable and nonprofit] sector will be subject to the
provisions of the [Act]. Obligations are gene rally imposed on ‘reporting entities’, that is,
entities providing ‘designated services’ (s 5) . ‘Designated services’ cover a range of
financial services (… s 6, Table 1) he nce, charitable and nonprofit organisations
receiving designated services will be affected by the [Act] in the sense that ‘reporting
entities’ when discharging their obligations under the regime will be collecting financial
information regarding these organisations a nd, in some circumstances, forwarding them
on to AUSTRAC (and from then on to security and police agencies).”
Australian nonprofits and charities may also be “subject to special attention when
‘reporting entities’ seek to comply with thei r obligations under the [Australian] AML/CTF
110 because the Act seeks to codify Australia’s commitments under the FATF
standards, and a key focus of the FATF, th rough Special Recommendation VIII, has been
with nonprofit organizations.
The new Act also regulates what it terms “designated remittance arrangements,”
which “is the [Act]’s synonym for altern ative remittance systems like hawala.”
such groups – which may be nonprofit or charita ble organizations or have close links to
them – will be affected by the Act’s requirements of such “designated remittance
arrangements,” including reporting requirement s as “reporting entities” under the Act
(sec. 6) and registration require ments (part 6). One potential concern here is that the Act
would be used for indirect and selective regu lation of charities and perhaps those that
provide services to them.
The Act was roundly criticized by industr y, civil liberties, academic and other
representatives during the mandatory comment period. At leas t one organization –
Liberty Victoria, a leading ci vil liberties group, specifically ra ised the problem of impact
on the charitable sector.
Liberty Victoria noted that because the underlying “financing of terrorism”
offenses (discussed above, sec. 102.6 of the Criminal Code) are “very broad and capture
conduct that go far beyond intentional funding of politically or religiously motivated
violence,” including criminalizing donation of money to groups like Hamas “for the sole
108 Explanatory Memorandum, p. 1.
109 Communication from an Australian academic.
purpose of assisting its humanitarian activities,” and because “all but one of the listed
‘terrorist organisations’ under the Criminal Code are self-identified Muslim groups, the
Criminal Code ‘terrorist organisation’ pr ovisions have resulted in a tangible sense of fear
and uncertainty amongst Muslim Australians especially in relation to charity giving.”
Liberty Victoria cites a memb er of the Islamic Council of Victoria on the effect of
this legislation, and its potential compounding in the new Act: “This level of uncertainty
in an offence this serious is deeply wo rrying. And for Australian Muslims, doubly so.
Because charity is one of the five pillars on which Islamic practice is built, Muslims tend
to be a charitable people. That is especially true at certain times of the Islamic year when
charity is religiously mandated. Countless f und-raising efforts followed the tsunami and
the Pakistan earthquake, and even in the normal course of even ts, Muslim charities
regularly provide relief to parts of the Muslim world many other charities forget.”
Liberty Victoria disputes the necessity of such provisions – as well as the idea that
they faithfully reflect Australia’s obligations under the International Convention for the
Suppression of the Financing of Terrorism a nd the Financial Action Task Force’s Special
Recommendations on Terrorist Fi nancing. In reality, writes Liberty Victoria, “both these
documents, while calling for the criminalisation of the financing of terrorism, define
financing of terrorism in a narrower manner than sections 20-1 of the Charter of United
Nations Act 1945 (Cth) and section 102.6 of the Criminal Code, by emphasising the need
for an intention or knowledge that funds w ill be used to carry out terrorism.” “[B]y not
requiring that there be intenti on or knowledge that funds be used to facilitate acts of
violence, [the Australian le gislation] is at odds” with these international standards.
For Liberty Victoria, the solu tion is reasonably clear: the offenses in a separate
section of the Australian Criminal Code, Di vision 103, “at least require that the funds
have some connection with the engagement of a ‘terrorist act’. It is, therefore,
recommended that ‘financing of terrorism’ under the [new Act] be restricted to conduct
that amount to an offence under Division 103 of the Criminal Code.”
115 That suggestion
was not taken by the drafters.
Based on current information the enhanced Australian counter-terrorism statutory
stream has not yet been used to proscribe ch arities on terrorism grounds or in other ways
against charities. While new legislati on may potentially have more effects on the
charitable sector, the broad exis ting legislation does not appear to have been used against
112 Liberty Victoria submission on the Anti-M oney Laundering and Counter-Terrorism Financing Bill
2006 (Cth), 10 December 2006.
113 Liberty Victoria, id., citing Waleed Aly, Reckless Terror Law Threatens to Make Charity End at
Home , The Age
(Melbourne) , 29 November 2005, 15.
114 Liberty Victoria, id.
115 Liberty Victoria, id.
the charitable sector, and its effectiveness in halting any financial flows to terrorist
organizations using charities and stopping terrorism might legitimately be questioned.
General Conclusions: Counter-Terrorism, Civil Liberties, and the Enabling Legal
and Political Environment for Civil Society in Comparative Perspective
A number of common areas and lessons arise in the exploration of counter-
terrorism and the enabling legal and political environment for civil society in the United
States, the United Kingdom, and Australia.
1. Statutes and regulation barring vari ous forms of charitable assistance to or
use by terrorists were generally in place before September 11. They were rapidly
broadened in the ensuing seve ral years, and have since been further broadened. In
several countries – including Canada and othe rs – still further broadening measures are
2. Opposition from civil society and th e voluntary and charitable sector has
been episodic at most, and most clearl y focused in the United States, where the
government’s voluntary guidelines on overs eas giving have sparked discontent,
particularly in the philanthropic sector. Charities and philanthropic organizations tend to
become exercised by broadening government regul ation in this area only when they are
directly affected, as by the U.S. Treasury’s guidelines on overseas funding. The British
approach, at which the Charity Commission’s regulatory role has thus far remained at the
center of investigator y and enforcement activities, appears to have sparked less
opposition from the voluntary sector.
3. Certain key issues central to the le gal and political enabling environment
for civil society appear to arise in each country. They include:
• The process, scope, intentionality requirement and reviewability of
proscription decision making;
• The availability and fairness of a de-proscription process;
• The breadth of terrorist “support” or “material support” or “assistance” or
“training” or financing offenses, including the frequent lack of a mens rea
requirement and the breadth of the offense; ‘
• The dangers to associational freedom potentially posed by the broad
legislation already enacted or proposed;
• The difficulty in preserving a central role for nonpolitical and nonpartisan
charity regulators, where th ey exist; and other issues.
4. There are some key differences amon g “war on terror” states in their
approaches to counter-terrorism and civil society. The British and American cases
represent divergent approaches, while each remains committed to combating terrorist
activity, including the misuse of ch arities for terrorist purposes.
The British regulatory approach, with the Charity Commission at its center,
focuses inquiries into suspicious cases, with a range of potential solutions that can
include strengthened procedures, replacemen t of trustees and on up to closing and
proscription of the charity. The American approach has been centered on prosecution
for “material support” and other criminal charges, more recently supplemented by
“voluntary guidelines” intended to promote comp liance, particularly in the philanthropic
In my view the British approach may well have worked more effectively in the
years since 2001. The British case studies disc ussed above demonstrate that the Charities
Commission employs a broad range of investigat ive and regulatory responses to concerns
that charities have links with terrorism. Not all of the regulatory responses are punitive
and can include requiring improved record-keep ing and other measures that may make it
easier to detect links with te rrorists in the future. It shoul d be noted, however, that the
regulation of charities in Britain is cente red in one level of government whereas the
United States, Australia and Canada are all federations in which regulatory jurisdiction
over charities are divided between different levels of government.
5. Is self-regulation by civil society and the voluntary sector a useful solution
to the problems of counter-terrorism law and policy? Self-regulation emerges with mixed
success in these jurisdictions.
In the United States, the self-regulatory approach of the Treasury’s voluntary
guidelines on overseas giving sparked opposition . Some charities attempted to comply
with these voluntary guidelines through additional vetting procedures while some
attempted to shift risk downstream to gr antees through revised and strengthened grant
letters. In Britain the sophi stication and nuance of the Ch arity Commission and its role
has perhaps reduced the need for a self-regulatory approach as the Commission has
helped to educate the charitable sector as well as adopting a range of investigatory and
Measures affecting civil society and its enabling legal and political environment
are, of course, not only limited to the United States, the United Kingdom, and Australia.
They have been undertaken in many other c ountries as well. This paper has focused on
those three countries because they have played a leading role in the “war on terror,” and
because developments in them have gone deeper and may have a more long-lasting
impact on civil society and the voluntary sector.
But it is important to note that other ve ry important countries have encountered
these dilemmas and conflicts as well. They include the Netherlands,
116 Canada, 117 and
116 See C.R.M. Versteegh, Terrorism and the Vulnerability of Charitable Organisations , Paper presented
to the International Society for Third Sector Resear ch Seventh International Conference, Bangkok (July
South Africa, as well as regions such as the European Union. 118 And of course initiatives
to chart a better course in the relationship between counter-terrorism law and policy and
the enabling environment have been launched. These include the Montreux Initiative in
Europe and the Middle East,
119 other efforts to bring together Islamic charities and to
improve standards, such as the Humanitarian Forum, established by the charity Islamic
relief in June 2005,
120 the efforts by public charities a nd foundations in the United States
to establish the Principles of International Charity, 121 the joint work between the
European Foundation Centre and the U.S. C ouncil on Foundations to draft and publicize
the Principles of Accountability for International Philanthropy,
122 and the efforts by the
Charity Commission in the U.K. to fight terrorism while preserving the enabling
2006). The Netherlands has enacted an Act on Terrorist Crimes (August 2004), intended to be consistent
with the European Union framework for counter-terrorism measures. In 2006 the Netherlands adopted
further legislation banning organizations (including charitable organizations) on the United Nations or
European Union terrorism organization proscription lists. See Background Note: The Netherlands, at
117 On developments in Canada, see Blake Bromley, The Post 9/11 Paradigm of International
Philanthropy , Paper presented to the International Society fo r Third Sector Research Seventh International
Conference, Bangkok (July 2006); Terrence Carter, The Impact of Anti-Terrorism Legislation on Charities
in Canada: The Need for an Appropriate Balance (2007), at www.antiterrorismlaw.ca; Terrance S. Carter,
Canadian Charities: The Forgotten Victims of Canada’s Anti-Terrorism Legislation, International Journal
of Civil Society Law IV:4 (October 2006); Blake Bromley, Funding Terrorism and Charities, Commission
of Inquiry into the Investigation of the Bombing of Air India Flight 182 (2007).
118 On developments in the European Union, see the Council Framework Decision on Combating
Terrorism (13 June 2002), Commission Communication on the Prevention of and Fight against Terrorist
Financing (20 October 2004), and the Commission Communication on the Prevention of and Fight against
Terrorist Financing through Enhanced National Level Coordination and Greater Transparency of the Non-
profit Sector (29 November 2005). Thes e and other efforts are reviewed in the Independent Scrutiny in
Response to Recommendation 41 of the EU Counter Terrorist Financing Strategy Presented to the
European Council of December 2004 to Assess the EU’s Efforts in the Fight Against Terrorist Financing (1
February 2007). These and additional useful materi als are available at ec.europa.eu/justice_home/fsj/
terrorism/ prevention/ fsj_terrorism_prevention_disrupt_en.htm. For independent analyses, see
Grantmakers Without Borders, Update note on developments at EU-level relating to CTM (21 June 2007);
and Amnesty International, Human Rights Dissolving at the Borders? Counter-Terrorism and EU Criminal
Law (2005), at www.amnesty.org/en/library/info/ IOR61/012/2005.
119 See The Montreux Initiative (MI): Towards cooperation in removing unjustified obstacles for Islamic
Charities (February 2007); The Montreux Initiative, Conclusions (Revised in Istanbul, 22 November
2005); Jonathan Benthall, Towards cooperation in removing obstacles for Islamic charities, Feasibility
study for the Federal Department of Foreign Affairs, Bern (May 2005).
120 Citations to Humanitarian Forum.
121 See www.ombwatch.org/npa/Treasury%20 Principles%20Final%20Document%20.pdf, and the
discussion of the Principles of Interna tional Charity in the U.S. section above.
122 See https://www.cof.org/council/prdetail.cfm?ItemNumber=10038.
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environment for the voluntary sector and the distinct roles of the Commission and other
bodies in the U.K.
Each of the countries and regions analyzed here, and others such as the
Netherlands, Canada, South Africa, and the Eu ropean Union, as well as the various other
initiatives to strengthen governance and acc ountability, will be important to follow
carefully in the years ahead as nations str uggle with the balance between security and
freedom, in formulating and enforcing appropriate counter-terrorism laws and policies
without unnecessarily damaging the enabling le gal and political environment for civil
society. Counter-terrorism law and policy is severely challenging civil society and civil
liberties in a number of “war on terror” st ates, and we must work toward ameliorating
those effects wherever possible.
123 See Charity Commission, The Home Office and HM Treasury’s Revi ew of Safeguards to Protect the
Charitable Sector (England and Wales) from Terrorist Abuse: The Charity Commission’s Reponse to the
Consultation (August 2007), at www.charity-commission.gov.uk/supportingcharities/terror.asp.