H.R. 7638 — FAIR Act of 2026

This section comprehensively revises civil asset forfeiture procedures under 18 U.S.C. § 983 to eliminate nonjudicial forfeitures, heighten the government's burden of proof, and enhance claimant protections. (Adds new subsection (k) prohibiting federal agencies from conducting nonjudicial forfeitures and requiring all forfeitures, including entry of any forfeiture order, to occur through judicial process in U.S. district court.) Among other changes, the section (1) shortens the notice period to interested parties to 7 days after seizure (from 60 days) and requires the government to determine any party's identity and address within 7 days after seizure or turnover; (2) reduces the post-claim verification period to 30 days after seizure (from 90 days); (3) authorizes courts to appoint counsel for claimants who are financially unable to obtain representation or for whom representation costs exceed the property's value, and ensures counsel in all civil forfeiture proceedings (previously limited to certain judicial cases involving primary residences); (4) raises the government's general burden of proof to clear and convincing evidence (from preponderance of the evidence) and requires it to prove by that standard a substantial connection between the property and the offense plus the owner's intent to facilitate, knowing consent, or willful blindness; (5) places on the government the burden to prove by preponderance of the evidence that a claimant is not an innocent owner, whom the claimant may rebut; (6) requires any proceeding on a motion to set aside a forfeiture order to commence within 6 months of granting the motion; and (7) expands factors for courts to consider in remission or mitigation of forfeiture, including offense seriousness, property nexus to offense, available sentences, property value, and hardship to owner and dependents.

This section eliminates equitable sharing payments to other federal, state, local, and foreign law enforcement agencies from the Customs Forfeiture Fund (19 U.S.C. 1613b(a)(1)(F), (2)(B)) and revises disposition of forfeited property under civil asset forfeiture laws. Specifically, the section— (1) amends the Controlled Substances Act (21 U.S.C. 881(e)) to limit transfers of forfeited property to after judicial forfeiture (striking "civilly or"), eliminate transfers to participating federal agencies, deposit non-judicial forfeiture proceeds in the General Fund of the Treasury (from the Department of Justice Assets Forfeiture Fund under 28 U.S.C. 524(c)), and make conforming changes; (2) amends 18 U.S.C. 981(e) to require deposit of forfeited proceeds in the General Fund or agency transfer of property (striking prior references to the Assets Forfeiture Fund), redesignates paragraphs, and strikes related sentences; revises 18 U.S.C. 983(g) to remove "grossly" from standards for attorney fees awards; (3) amends 19 U.S.C. 1616a to limit it to dismissal of federal proceedings in favor of state forfeiture (striking provisions authorizing transfers of forfeited property to state or local agencies); and (4) removes references to the Customs Forfeiture Fund from miscellaneous user fees (31 U.S.C. 9705). (As background, the Customs Forfeiture Fund finances U.S. Customs and Border Protection and Coast Guard seizure, forfeiture, and related operations; equitable sharing previously enabled distribution of up to 80% of net forfeiture proceeds to state and local partners. Thus, these changes end such distributions and federal transfers, redirecting proceeds to the General Fund.)

This section eliminates the statutory caps limiting the use of net deposits in the Department of Justice Assets Forfeiture Fund to 50 percent for (1) federal law enforcement operations and (2) equitable sharing with state and local law enforcement agencies. (The Assets Forfeiture Fund receives proceeds from civil and criminal forfeitures to reimburse DOJ expenses and support related activities; thus, these changes allow greater flexibility in allocating deposits beyond attorney fees and litigation costs.)

This section amends the prohibition on structuring financial transactions to evade currency transaction reporting requirements (i.e., 31 U.S.C. 5324, which prohibits conducting or attempting transactions—such as breaking a single transaction exceeding $10,000 into smaller ones—to evade reports required under sections 5313 or 5316) by (1) inserting a "knowingly" standard in the introductory clauses of subsections (a), (b), and (c); and (2) limiting subsection (a)(3)—which addresses structuring involving international transportation of monetary instruments—to "funds not derived from a legitimate source." The section further amends 31 U.S.C. 5317, which authorizes forfeitures for currency reporting violations, by adding subsection (d) to require (1) notice to persons whose property is seized or restrained under civil forfeiture provisions for an alleged structuring violation; and (2) a probable cause hearing in a court of competent jurisdiction not later than 14 days after such notice, with return of the property unless probable cause exists for the violation. These changes to section 5317(d) apply to seizures or restraints after enactment.

This section revises the annual reporting requirements for the Department of Justice Assets Forfeiture Fund (AFF) to require identification of deposits from each type of forfeiture, specifically distinguishing funds obtained from criminal forfeitures and from civil forfeitures. (The AFF receives proceeds from DOJ forfeiture proceedings to support law enforcement activities.)

This section specifies that the amendments made by this Act apply to (1) any civil forfeiture proceeding pending on or filed on or after the date of enactment and (2) any amounts received from the forfeiture of property on or after such date.