Insights: Week Of November 7, 2022

Courtesy of WikiMedia Commons

Target: Terrorism

Recent actions by the federal government, including new sanctions and prosecutions of supporters of terrorism, indicate that the Biden administration is focusing on counterterrorism financing, in concert with international CT efforts. OFAC over the past two weeks has sanctioned nearly 60 individuals, vessels, and entities as specially designated global terrorists.

  • A Pennsylvania man this week was sentenced to more than 17 years, in federal prison, followed by a lifetime of supervised release, for attempting to provide material support to ISIS. Mustafa Mousab Alowemer admitted to plotting to bomb a church in Pittsburgh to support ISIS and inspire others to also plot attacks.
  • A teenager in Maine this week was charged with conspiracy to provide material support to terrorists. Federal prosecutors allege that Xavier Pelkey conspired with two teenagers in other states on social media to conduct a violent attack on a Shia mosque in Chicago, and possibly a Jewish synagogue.
  • OFAC this week imposed sanctions on two business associates of sanctioned al-Qa‘ida financial facilitator and external operations plotter Ahmed Luqman Talib. Mohamad Irshad Mohamad Haris Nizar and Musab Turkmen provided financial support to Talib, who was arrested by Australian authorities arrested in March 2021 and charged with plotting foreign terrorist operations.
  • Treasury this week also designated four members of an ISIS cell operating in South Africa who have provided support to the terrorist group. Treasury also designated eight companies owned or controlled by the individuals in this ISIS cell. This year, the United Nations Security Council and media reporting highlighted the emerging importance of South Africa as a financial hub for ISIS.

International efforts are also ramping up. The financial intelligence units (FIUs) of 17 African countries this week agreed to cooperate in combating money laundering and terrorist financing in the region. The FIUs of Benin, Cote d’Ivoire, Gambia, Ghana, Senegal, Nigeria, and others will develop an action plan to address financial complexities linked with terrorism and the proliferation of weapons in the region. Australia has relisted 27 individuals and 36 entities following a review of its counterterrorism financing sanctions. The government has also sanctioned 256 individuals and 91 entities that are subject to the UN’s ISIS and al-Qa‘ida sanctions authorities.

Banks and financial institutions must be able to identify red flags that may indicate terrorism financing. Recognizing jurisdictions listed by the Financial Action Task Force (FATF) as having strategic AML/CFT deficiencies and monitoring changes to that list is just the tip of the iceberg. Although red flags for money laundering and terrorist financing are many times similar, and not every indicator is necessarily emblematic of terrorist financing, expert analysts can help identify combinations of red flags that present the most significant risks of transacting with terrorists or their facilitators.

FiveBy created Risk Assessment Services to help US firms, banks, and financial institutions analyze and evaluate the indicators associated with possible money-laundering, terrorist-financing, and other risky transactions, helping inform decisions and avoid regulatory and reputational risk.

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Compliance and Due Diligence

The UK has frozen more than $20 billion in sanctioned Russian assets—a combination of shares in companies and cash held in bank accounts. The figure does not include physical assets such as real estate, yachts, or assets held in Crown Dependencies such as Guernsey and Jersey. Russia has overtaken Libya and Iran to become the UK’s most-sanctioned nation.

New EU sanctions against Iran for repression and human rights violations will be approved on Monday. Roughly 30 individuals and entities will be sanctioned in response to a crackdown by the regime on protests over the death of Mahsa Amini.

Treasury—in coordination with the Netherlands and the UK—this week designated Alex Adrianus Martinus Peijnenburg and Martinus Pterus Henri De Koning, Matthew Simon Grimm, and nine entities pursuant to EO 14059 for supplying illicit fentanyl and other drugs to US markets through internet sales and a host of shell companies.

Four individuals and US company, Quadrant Magnetics, this week were charged,  with wire fraud, violations of the Arms Export Control Act, and smuggling of goods through a scheme to provide export-controlled defense-related technical data drawings owned by two US companies to a corporation in China without a license. Quadrant Magnetics also allegedly supplied two US companies with Chinese-origin rare earth magnets, which were included in components sold to the United States.

The United States and EU this week announced new sanctions against Myanmar’s military regime aimed at officials, companies, and arms dealers. The US Treasury designated Kyaw Min Oo—a Burmese businessman with close ties to the military, who has been facilitating arms deals and weapons purchases on behalf of the Tatmadaw. In addition, Kyaw Min Oo has used his company, Sky Aviator Company Limited, to facilitate upgrades and maintenance for military aircraft.

Tornado Cash has been sanctioned since August, but OFAC this week delisted it and redesignated it under North Korea authorities, asserting that the cryptocurrency mixer has been used by North Korea to support its weapons of mass destruction program. In addition to Tornado Cash, OFAC sanctioned North Korea’s national flag airline, Air Koryo, and two individuals Treasury accuses of helping North Korea transfer missile parts into the country.

The European Council has extended until Nov. 12, 2023 sanctions against Turkey over its unauthorized drilling activities in the Eastern Mediterranean. Two individuals—Turkish Petroleum (TPAO) Board Member and Deputy General Manager Mehmet Ferruh Akalın and TPAO Exploration Department Deputy Director Ali Coşkun Namoğlu—currently are subject to sanctions under this regime.

Satellite companies are increasingly helping spot vessels that have been shutting off their Automatic Identification Systems (AIS) to evade detection. The ability to track vessels that are going dark can help identify sanctions evasion and other illicit activities.

More than 300 Turkish nongovernmental organizations (NGOs) are voicing “strong” objections to a resolution the French Senate will consider next week that would impose sanctions on Azerbaijan. Should the motion pass, the Türkiye-Azerbaijan Friendship, Cooperation and Solidarity Foundation will call for a countrywide boycott of French goods.

OFAC this week issued a general license authorizing transactions that are necessary for Russian diplomatic or consular missions to conduct official business. US persons are now able to compensate employees of Russian missions, including paying salaries and reimbursing official expenses. Another general license issued by Treasury this week authorizes energy-related transactions with Russian banks.

Fraud and Abuse

Thirty-six people, including two former presidents and six former ministers, will be tried in Panama for money laundering in connection with bribery and corruption charges against Brazilian construction firm Odebrecht. Authorities allege that Oderbrecht made bribe payments in Peru, Mexico, Argentina, and Colombia, and other countries, in exchange for public works contracts.

Two individuals have been arrested for operating an international Ponzi scheme that stole roughly $28 million from thousands of South Korean victims. The suspects promoted FutureNet—an international pyramid scheme that would use investments to buy advertisement packsand resell them at a profit in chat rooms. 

Georgian authorities this week conducted searches at five call centers in an effort to crack down on transnational criminal activities. Homes, cars, and workplaces were raided, and electronic data and documents were searched resulting in the arrest of one person. Assets believed to have been obtained through illegal means were seized. The criminal group allegedly established companies in numerous countries, stealing funds belonging to victims in EU member states through call centers, and laundering the proceeds.

A North Carolina man has admitted to conspiring to launder Paycheck Protection Program (PPP) loans, which he fraudulently obtained using several companies under his control. Quentin Allen Jackson wrote checks payable from the funds he received from the PPP to his co-conspirators, who were identified as employees in the loan applications, to make it appear that the companies are paying biweekly payroll to their workers. The recipients of the checks would then cash the checks and return the illicit cash to Jackson.

A phone scammer, who along with his co-conspirators called victims pretending to be a member of law enforcement and threatened them with arrest or loss of public assistance if they didn’t send him money, has been sentenced in federal court to two years in prison. Utkarsh Thakur retrieved the cash mailed by the victims using fake IDs and transported the funds to others involved in the scheme. In total, Thakur laundered more than $1.5 million in victim funds.

The OECD says that Portugal has not made a single foreign bribery conviction since the OECD Anti-Bribery Convention entered into force in 2002. Lisbon also has had low detection rates, and the country’s authorities prematurely closed foreign bribery cases without investigating relevant allegations.

Nigerian influencer Ramon Abbas (aka Hushpuppi) has been sentenced to 135 months in federal prison for money laundering and internet fraud. Abbas was also ordered to pay $1.7 million in restitution to two fraud victims. He was taken into federal custody in June 2020 after being arrested in Dubai and expelled from the UAE. In one scheme in January 2019, Abbas worked with a co-conspirator to launder $14.7 million that North Korean hackers stole from a bank in Malta.

A key official for the 2022 FIFA World Cup in Qatar is denying bribery allegations after again being accused of buying votes to secure the tournament in the country. The claims resurfaced in a Netflix documentary this week that featured a whistleblower who claimed that she was in a hotel room with Hassan Al-Thawadi in Angola in January 2010 when he offered bribes to three men, who were among 24 voters set to pick the 2018 and 2022 World Cup hosts later that year.

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