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The Emergency That Was Never Lifted
Twenty-five years after 9/11, the framework we assembled in a hurry, shapes everything from drug policy to energy markets. Here is what compliance teams should do about it.
On the morning of September 11, 2001, I was an Assistant United States Attorney in the Eastern District of New York, running a little late. The jury in the trial I was prosecuting had deliberated until late the night before.
The case was a bankruptcy fraud. We had charged a former assistant district attorney with convincing people to sell their cars to his company for cash on the spot, handing them post-dated checks instead, and letting the checks bounce. The scheme ran to several hundred thousand dollars before the company went under.
Walking to the office, cars started whizzing past me. I got to the U.S. Attorney’s Office to pick up my cart to head over to the courthouse, and that is where I heard about the plane hitting the first tower. Several of us gathered at the window and watched the flames in disbelief. Soon we saw the second tower ablaze and the towers fall.
Then the smoke, and the sirens, and ashes floating in the air. The bridge was closed, so we sorted ourselves out by those who lived in Brooklyn, and a group came back with me to my tiny apartment for a few hours. We were all anxious to do something, to help in any way. We walked down the streets and tried to donate blood. There was no need.
Judge Garaufis sent my jury home for a week. My FBI case agent disappeared. The Bureau sent her to Fresh Kills, the Staten Island landfill where the debris from the towers was taken to be sifted for remains.
Like a lot of people that Fall, I came to feel there was a larger purpose to serve. A call came asking whether I would interview for a job at the U.S. Treasury, and I took it.
I started in November 2001 as Deputy Assistant Secretary of the Treasury for Money Laundering and Financial Crimes, about three weeks after the PATRIOT Act became law. The assignment, reduced to its essentials, was to help take the machinery this country had spent twenty years building to pursue drug proceeds, turn it around, and aim it at terrorism. The Treasury team included Under Secretary Jimmy Gurulé, General Counsel David Aufhauser, U.S. Customs Service Commissioner Robert Bonner, and legions of Assistant Secretaries and Deputy Assistant Secretaries, like me.
Our work became the 2002 National Money Laundering Strategy, signed by Secretary O’Neill and Attorney General Ashcroft. It was the first national strategy the United States ever issued that treated terrorist financing as a goal in its own right.
We worked around the clock at a frantic pace. Nobody in that building thought we were designing a system. It felt like triage.
And yet, twenty-five years later, what we all assembled in those months is still the foundation of how this country addresses economic threats of every kind.
What we got wrong
We got several important things wrong about how al-Qaeda financed the attack, both in the programs we had before 9/11 and in what we built after it. The first was assuming that terrorist financing meant serious money moving through banks. It didn’t. The 9/11 Commission put the cost of the entire plot at somewhere between $400,000 and $500,000, barely more than my bankruptcy defendant was charged with taking. Much of it moved by ordinary wire transfer into accounts opened with genuine identification. We built an apparatus to detect large illicit flows but expected it to catch conduct that looked like ordinary legitimate activity, small and cheap, right up until it turned out to be anything but.
The second was that the objective was asset denial. That is how we described the work and, more consequentially, how we measured it: in dollars blocked and accounts frozen. What lasted, though, wasn’t the denial. It was the intelligence. The financial data we collected turned out to be one of the best targeting and attribution tools the government has, useful for identifying and tracking networks long after any given transaction was blocked or missed. We understood that well after the fact, rather than by design.
The third one is mine. Goal One of the 2002 Strategy was to measure the effectiveness of anti-money laundering efforts. Goal One. We knew in 2002 that we could not demonstrate whether the system worked. This was a high priority for Secretary O’Neill and other Treasury leadership. The U.S. Government Accountability Office (GAO) reported the following year that none of the national strategies, ours included, were tied to a genuine threat and risk assessment, and that they contained more priorities than anyone could realistically achieve.
Twenty-four years after that Strategy, the problem is still largely unsolved. I don’t raise it to argue the system fails. I am raising it because we have asked a great many institutions to invest heavily in the strength of a proposition we promised to effectively test and never did.
Renewed every year since 2002
Executive Order 13224, signed on September 23, 2001, provided the Treasury and State Department with the ability to designate certain individuals, terrorist groups, companies, and even vessels, as Specially Designated Global Terrorists, and to freeze their assets. This order rests on a national emergency declared under a statute from 1977, the International Emergency Economic Powers Act, which provides statutory authority for nearly all our sanctions programs. That emergency has been formally renewed by every president, every year since 2002, and is due for renewal again this month. Bush. Obama. Trump. Biden. And Trump again.
No one decided the framework should be permanent and designed it accordingly. Renewal simply continued, because letting the authority lapse was unthinkable and reopening it was problematic. It became permanent anyway.
Where those authorities are working today
The provisions written in the fall of 2001 are not historical artifacts. They are still in active use.
Just last month, FinCEN proposed severing a foreign bank’s Gulf operations from the U.S. correspondent banking system under Section 311 of the PATRIOT Act, on a finding that the institution’s customers included apparent front companies for Iran’s Ministry of Defense and the Islamic Revolutionary Guard Corps.
In December 2025, the Justice Department seized a tanker carrying Venezuelan crude. The forfeiture theory was that the vessel, which had previously shipped crude on behalf of Iran’s IRGC, was property affording a person a source of influence over a designated terrorist organization, language written into 18 U.S.C. 981(a)(1)(G) by Section 806 of the PATRIOT Act in October 2001.
The current U.S. counternarcotics strategy is to designate drug cartels as Foreign Terrorist Organizations, meaning that any transactions with them also violate 18 U.S.C. 2339B, which prohibits providing an FTO with material support. Congress wrote this in 1996, and we turned it on al-Qaeda after 2001.
Not one of those authorities was written with Venezuela in mind. Or fentanyl. Or a shipping lane.
Four things compliance teams should do about it
When the government aims a counterterrorism authority at a cartel, the target changes but the legal architecture does not. Everything attached to our terrorism laws arrives with it, including criminal exposure and private lawsuits. No new statute has to pass for that to happen, and no one sends notice when it does.
- Consider material support as a risk distinct from sanctions screening. When a drug trafficking organization is designated as an FTO, IEEPA or sanctions exposure is no longer the ceiling. Section 2339B is a criminal material support statute, and the Anti-Terrorism Act gives private plaintiffs the ability to sue companies that violate this statute, with a treble damages remedy. JASTA added aiding-and-abetting liability in 2016, which puts ordinary commercial defendants in the caption. The Supreme Court raised that bar considerably in Twitter v. Taamneh in 2023, so the exposure should not be overstated. But screening asks whether a counterparty is on a list. Material support asks what you provided, to whom, and what you knew.
- Embed route and geography risk into your models. OFAC has publicly described cartel control at major Mexican ports like Manzanillo, which means cargo moving through them can carry exposure that has nothing to do with who sits on either end of the transaction. Counterparty screening is not built to see that, and most trade finance and logistics programs have no separate control that looks for it. The U.S. has made these terrorism laws the basis for targeting Iran’s Dark Fleet and illicit activity around the Strait of Hormuz. Understanding how these networks operate is essential for the shipping, trading, and oil industries.
- Prepare for the same pattern in export controls. What the Bureau of Industry and Security (BIS) has done since Russia’s invasion of Ukraine closely resembles what OFAC did after 2001. The government responded to a shock by denying an adversary the resources it needed, and it conscripted the private sector to do the enforcing. Teams should be preparing for the return of the fifty percent rule on November 10, 2026, after a year of suspension, as well as a broader reading of General Prohibition 10.
- Monitor guidance, not just rulemaking. Most of what is changing in export controls is old authority reinterpreted rather than new law enacted. Reinterpretation arrives faster than legislation and with far less notice. A program that watches only the Federal Register will always be behind.
Durability or drift
I am proud of a good deal of what we built in those years, and I am struck by how well the tools have held up. A forfeiture provision drafted in a matter of weeks in 2001 is doing serious work against sanctioned oil shipments nearly twenty-five years later.
But it would be incomplete to call that durability without acknowledging what a fair critic calls it instead: drift. The emergency counterterrorism authority has become the operating framework for varied strategic goals including drug policy and energy markets. Congress has never meaningfully reopened the grant. The tools did not survive because we designed them well. They survived because nobody has been willing to touch them.
My jury came back and convicted the defendant. Ordinary law stopped for seven days and then went back to work. The emergency order written that autumn has been renewed every year and has never stopped at all.
That is not a failure. But it was never the plan. And for the institutions that have to comply, the practical consequence is the same either way. These authorities are not going to narrow. They will keep being applied to problems nobody anticipated. Build the program for that.
MSU Institutional Assessment + RAMAGELLAN MonitorshipEmpire/Liberty Review