Financial Services:

Post-hearing Questions Regarding Recovering Foreign Regimes' Assets

GAO-04-831R: Published: May 27, 2004. Publicly Released: May 27, 2004.

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On March 18, 2004, GAO testified before the House Subcommittee's hearing on "The Hunt for Saddam's Money: U.S. and Foreign Efforts to Recover Iraq's Stolen Money." This letter responds to Congress's request that we provide answers to follow-up questions from the hearing. Congress's questions, along with our responses, are included in the report.

GAO does not have an opinion on the best approach for pursuing plundered assets. The best approach is likely to vary, based upon the specific facts of the case, such as the party pursuing the assets, the location of the assets, and whether the location is known. The International Emergency Economic Powers Act (IEEPA) authorizes the President to exercise economic powers to deal with unusual and extraordinary threats, which have their sources in whole or in part outside the United States, to the national security, foreign policy, or economy of the United States (50 U.S.C. 170) In October 2001, section 106 of the USA PATRIOT Act (P.L. 107-56), amended section 203 of IEEPA (50 USC 1702) to authorize the President, when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, to confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that he determines has planned, authorized, aided, or engaged in such hostilities or attacks. The President may vest all right, title, and interest in such confiscated property in any agency or person the President designates. The property may be used for purposes that are in the interest of and for the benefit of the United States. The Office of Foreign Assets Control (OFAC) has been actively involved in the Iraqi asset recovery effort. Department of the Treasury (Treasury)officials stated that U.S. banks are cooperating with the U.S. government in tracing illicit money. Under OFAC regulations, all U.S. persons, including financial institutions, are required to comply with orders to freeze assets and block transactions and report to OFAC within 10 business days of doing so. Treasury and Department of State (State) officials said that most of the frozen Iraqi assets that remain are located in financial institutions in Iraq's neighboring countries and in Europe. In March 2003, the Secretary of the Treasury requested that the international community identify and freeze all assets of the former Iraqi regime. Additionally, senior officials at Treasury and State have engaged in diplomatic efforts to encourage countries to report and transfer the amounts of Iraqi assets frozen within their countries.

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