Recently disclosed court records indicate that Citibank froze the accounts of multiple nonprofit organizations and state agencies in February, following directives from federal agencies, including the FBI. The FBI justified its request by citing “credible information” about potential criminal activity, specifically mentioning conspiracy to defraud the United States. Additionally, the Environmental Protection Agency (EPA) demanded the return of grant funds, and the Treasury Department instructed Citibank to comply with these actions. This move has sparked concern among climate advocacy groups, as the frozen funds were originally allocated by the Biden administration to support environmental initiatives aimed at reducing pollution.
Among the affected organizations are Habitat for Humanity, DC Green Bank, and United Way, all of which are now facing financial turmoil. The inability to access their accounts has disrupted essential projects and threatened their ability to pay staff and cover operational expenses. While Citibank’s standard agreements typically restrict account freezes to 48 hours unless fraud is confirmed, court filings suggest that the bank has continued to withhold funds for an extended period at the request of federal authorities. Furthermore, internal conflicts within the Justice Department have surfaced, as a senior prosecutor resigned in protest, stating that there was insufficient evidence to justify the account freezes.
The controversy centers around the Greenhouse Gas Reduction Fund, a $27 billion program established under the Inflation Reduction Act of 2022. Of this amount, $14 billion was allocated to the National Clean Investment Fund, which provides grants to green banks across the country. Citibank was designated as the financial institution responsible for managing these funds. However, the Trump administration’s EPA has alleged financial mismanagement within the program, citing oversight failures and conflicts of interest. These claims have led to investigations by both the Justice Department and the FBI, despite a lack of publicly disclosed evidence supporting the allegations.
The freezing of funds has prompted legal action from several affected organizations. Climate United Fund, a coalition that received nearly $7 billion in grant money, has sued both the EPA and Citibank, arguing that the freeze violates federal law and obstructs a program explicitly mandated by Congress. Similarly, other nonprofit groups, including the Coalition for Green Capital and Power Forward Communities, have accused Citibank of breaching contractual agreements by withholding funds that had already been approved by the EPA. These lawsuits highlight the growing concerns that federal law enforcement is being leveraged for political purposes rather than genuine financial oversight.
Senator Sheldon Whitehouse has called for an official investigation into whether the Department of Justice and FBI are being used to hinder climate finance efforts. He warned that if law enforcement agencies are complicit in blocking congressionally approved funding under false pretenses, it could constitute serious legal and ethical violations. As legal battles unfold, environmental advocates argue that these actions represent a broader effort to stifle climate initiatives, raising critical questions about the intersection of politics, financial institutions, and law enforcement in shaping the future of environmental policy.