Presidential Memorandum on Countering Domestic Terrorism: Legal and Enforcement Implications

A comprehensive presidential memorandum issued on September 25, 2025 outlines a broad national strategy to counter domestic terrorism and organized political violence, with a particular focus on nonprofit organizations and financial networks.

On September 25, the president issued a comprehensive National Security Presidential Memorandum (NSPM) on Countering “Domestic Terrorism” and “Organized Political Violence.” The directive is grounded in recent high-profile acts of political violence, such as the killing of Charlie Kirk and attacks on federal officers, which the memorandum cites as justification for enhanced federal intervention.

The memorandum asserts that these incidents are not isolated, but rather part of “sophisticated, organized campaigns” that threaten national security and public order. It casts a wide net and identifies “common threads animating this violent conduct,” including “anti-Americanism, anti-capitalism, anti-Christianity; support for the overthrow of the United States Government; extremism on migration, race, and gender; and hostility towards those who hold traditional views on family, religion, and morality.”

TARGETS AND BREADTH OF COVERAGE

The NSPM explicitly extends beyond individuals committing violence to reach “all participants in these criminal and terroristic conspiracies, including the organized structures, networks, entities, organizations, funding sources, and predicate actions behind them.” Notably, it identifies educational institutions as well as “institutional and individual funders, and officers and employees of organizations, that are responsible for, sponsor, or otherwise aid and abet the principal actors engaging in the criminal conduct.”

This indicates a likely increase in scrutiny of tax-exempt organizations, including tax-exempt status audits for 501(c)(3) organizations, criminal investigations, and in some cases terrorism designations for entities perceived as supporting or encouraging domestic terrorism.

Tax-exempt entities should begin to prepare for these inevitable investigations, including by understanding their vulnerabilities and focusing on existing compliance mechanisms and strengthening such mechanisms where appropriate.

CREATION OF NATIONAL JOINT TERRORISM TASK FORCE

The NSPM establishes a National Joint Terrorism Task Force (JTTF) to “investigate, prosecute, and disrupt” domestic terrorism and political violence. It directs the JTTF to focus on two categories of conduct related to recruitment or radicalization:

• Political violence or intimidation designed to suppress lawful political activity or obstruct the rule of law
• Political violence, terrorism, or conspiracy against rights, including the violent deprivation of citizens’ rights

The JTTF must coordinate with all relevant executive departments and agencies, including the US Department of Justice, the Treasury Department, and Internal Revenue Service.

EXPANSIVE INVESTIGATIVE AND PROSECUTORIAL AUTHORITY

All federal law enforcement agencies are instructed to “question and interrogate, within all lawful authorities,” those engaged in political violence and related financial sponsorship prior to adjudication or entering into plea deals. The memorandum emphasizes particular crimes such as assaulting federal officers, conspiracy, money laundering, funding terrorist acts, arson, racketeering, and major fraud.

Agencies are also directed to apply strategies from efforts to disrupt violent and organized crime networks. For example, Treasury is instructed to devote “all available resources” to identifying and disrupting financial networks funding domestic terrorism, tracing “illicit funding streams,” and coordinating with DOJ, while the IRS is directed to ensure that no tax-exempt entities “directly or indirectly” finance political violence or domestic terrorism, referring violators to DOJ for potential prosecution.

DOMESTIC TERRORIST ORGANIZATION DESIGNATION

The attorney general may recommend that groups investigated by the JTTF be designated as “domestic terrorist organizations” under 18 USC § 2331(5), which defines domestic terrorism as acts dangerous to human life violating US or state law and intended to intimidate civilians, influence government policy by coercion, or affect government conduct through mass destruction, assassination, or kidnapping.

The memorandum instructs the attorney general and the Secretary of Homeland Security to designate domestic terrorism as a “national priority area,” thereby elevating its status within federal law enforcement and intelligence operations. This formal designation is expected to drive additional resource allocation, interagency coordination, and aggressive enforcement actions.

FINANCIAL OVERSIGHT AND ASSET DISRUPTION

The Treasury Secretary is charged with identifying and disrupting financial networks that fund domestic terrorism and political violence. This broad directive will involve the examination of financial flows, issuance of guidance to financial institutions to identify illicit funding streams, and coordination with DOJ on suspicious activity reports. Such measures may result in attempts to block assets of nonprofit organizations and other entities suspected of facilitating political violence.

IRS ACTIONS AND TAX-EXEMPT STATUS REVIEWS

The IRS commissioner is directed to ensure that no tax-exempt entities are “directly or indirectly” financing political violence or domestic terrorism. Where applicable, such organizations will be referred to DOJ for investigation and possible prosecution. The memorandum indicates heightened scrutiny of nonprofit organizations’ activities, funding sources, and operational transparency.

TAKEAWAYS

Tax Enforcement

While the NSPM does not itself target specific tax-exempt organizations, seek to directly revoke exemptions, or otherwise have an immediate effect on the applicable tax law, it places tax-exempt entities and related individuals and entities squarely at the center of federal investigation and enforcement efforts. Several themes emerge.

First, the memorandum targets “domestic terrorism” and “political violence.” While it refers to the definition of “domestic terrorism” in 18 USC § 2331(5) for the limited purpose of DOJ designations, the memorandum otherwise leaves those key terms undefined. This ambiguity provides considerable discretion to the IRS, Treasury, and other agencies to interpret what qualifies as indirect financing of domestic terrorism or political violence, heightening compliance and audit risks for nonprofits.

Second, the IRS is explicitly tasked with “tak[ing] action to ensure” no tax-exempt organizations (i.e., 501(c) organizations) are “directly or indirectly” financing political violence or domestic terrorism. As a result, nonprofits should anticipate expanded audits, increased data-sharing between IRS, DOJ, and Treasury, and intensified pressure to document that their grants and programs do not have even an indirect nexus to activities characterized as violent or radicalizing.

The directive stops short of invoking 26 USC § 501(p), which allows suspension of exemptions for entities formally designated as terrorist organizations under immigration statutes, but it foreshadows potential revocations and even referrals to DOJ for potential criminal investigation even without a formal 26 USC § 501(p) trigger.

A third concern is Treasury’s mandate to “trace illicit funding streams,” which invites deep dives into nonprofits’ cash flows, donor lists, and subgrantees. While the memorandum does not impose new donor-disclosure rules, investigations into these financial networks could unmask donor identities and link them—fairly or not—to alleged unlawful activity, potentially chilling charitable giving.

Finally, nonprofits should proactively strengthen their compliance posture and build audit defense plans. This could entail reviewing programmatic activities, grant-making practices, and partner relationships; enhancing documentation of due diligence on grantees and vendors; working closely with tax counsel to prepare for potential IRS inquiries or JTTF-related subpoenas; and developing strategies to manage reputational risk if the nonprofit, including its directors and officers in their individual capacities, a donor, or grantee becomes linked to a JTTF investigation.

Financial Crimes, FARA & Beyond

The memorandum’s reach is not confined to the nonprofit sector, and financial crime statutes such as those regarding money laundering, wire fraud, and racketeering may become cornerstones of enforcement activity under the directive. The strong emphasis on asset disruption signals that accounts could be blocked or frozen for entities suspected of financing proscribed activities even if they are never formally designated as terrorist organizations.

The memorandum also raises clear Foreign Agents Registration Act (FARA) implications by authorizing JTTF scrutiny of NGOs, US citizens abroad, and organizations with foreign ties for possible FARA violations. Any group engaging on behalf of a foreign principal in “political activities,” public relations, or fundraising efforts should reevaluate registration obligations and bolster public disclosure practices to minimize risk exposure.

Further, the instruction that all federal agencies “question and interrogate” individuals involved in political violence before adjudication or plea agreements reflects an aggressive investigative stance that may draw in corporate officers, directors, and donors. Organizations potentially within the memorandum’s scope should establish coordinated protocols for responding to subpoenas, interviews, and data requests to prevent inconsistent statements or inadvertent waivers of privilege.

Finally, financial institutions and large nonprofits should revisit and update their anti-money laundering and Know Your Customer frameworks to align with forthcoming Treasury guidance. Stress-testing compliance programs against DOJ’s Evaluation of Corporate Compliance Programs, with a special focus on third-party risk management and internal reporting structures, will be prudent as coordinated multiagency scrutiny could ramp up.

FORWARD-LOOKING PERSPECTIVES AND RECOMMENDATIONS

The September 25 NSPM marks a shift in federal domestic-terrorism enforcement, placing nonprofits, their donors, and financial intermediaries under a heightened level of scrutiny. While many provisions require further agency rulemaking or guidance, stakeholders should act now.

Nonprofits should consider instituting enhanced diligence over grantees, vendors, and events; train boards and staff on potential red flags for political violence allegations; and prepare response plans for IRS audits or DOJ subpoenas.

Financial institutions should prepare for Treasury’s anticipated guidance on tracing “illicit funding streams” and shore up internal resources in the event of increased suspicious-activity monitoring and reporting obligations.

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