Week of Monday, February 28, 2022 | Issue 4
Jennifer Kelly, Illicit Finance and Economic Threats (IFET) Team
South African Flag
Date: March 1, 2022
Parties involved: US Department of the Treasury’s Office of Foreign Assets Control (OFAC); ISIS; ISIS-Mozambique (ISIS-M); Farhad Hoomer; Siraaj Miller; Abdella Hussein Abadigga; Peter Charles Mbaga; South Africa
The event: The US Department of the Treasury’s OFAC imposed sanctions on four financial facilitators of ISIS and ISIS-M in South Africa: Farhad Hoomer, Siraaj Miller, Abdella Hussein Abadigga, and Peter Charles Mbaga. The sanctions include “all property and interests in property of the individuals named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” ISIS has recently attempted to expand their influence in Africa by targeting areas with limited government control. South Africa-based ISIS members play an important role in this expansion by transferring funds from the terrorist organization to the smaller branches across Africa.
Analysis & Implications:
The OFAC sanctions are likely to disrupt financing of the South African-based ISIS cells and decrease recruitment in other branches across Africa. This will likely reduce the threat of terrorist attacks from African-based ISIS cells. However, the sanctions on these four individuals are unlikely to impact ISIS’ overall ability to generate funds for the entire terrorist network due to the presence of financial facilitators in other regions.
A lack of financial controls and efficient border security has very likely enabled ISIS members’ transfer of illicit funds from South Africa across the African continent. With greater scrutiny from the OFAC on South Africa, ISIS will likely move or extend their African-based financial operations to other countries to evade sanctions and continue funding smaller ISIS cells. The terrorist group will likely focus on other countries with unstable governments, such as the Democratic Republic of Congo and South Sudan.
Date: March 4, 2022
Location: United Arab Emirates (UAE)
Parties involved: UAE; Financial Action Task Force (FATF); Organized criminal groups
The event: The FATF added the UAE to the “gray list” of jurisdictions subject to increased monitoring for illicit financial activity. The UAE has made “significant progress” in addressing shortcomings on its anti-money laundering (AML) regime and in combating the financing of terrorism (CFT) following an evaluation by FATF in 2020. However, FATF stated that further work was needed to facilitate international AML investigations, manage risks in industries including real estate, and identify suspicious financial transactions. The UAE government stated it had a “strong commitment” to cooperating with the FATF on improving AML/CFT weaknesses.
Analysis & Implications:
The inclusion of the UAE on the FATF’s gray list will almost certainly deter international companies from operating in the UAE, likely negatively impacting the economy. Organized criminal groups will likely take advantage of the weak AML/CFT controls and increase operations in the region until stronger measures are introduced, which will very likely further undermine the legitimacy of the UAE’s financial market.
Organized criminal groups in the UAE are likely evading detection of money-laundering activities through at-risk industries, including real estate, by using shell companies, which are unlikely to be investigated by financial institutions due to the high number of companies operating in the country. With more stringent controls on the real estate industry very likely incoming, UAE-based money-laundering groups will likely move their operations to the cryptocurrency market due to the lack of verification required from financial institutions.
Date: March 5, 2022
Parties involved: Singapore; Singaporean financial institutions; Russia; Russian banks; Ukraine; US; EU; United Kingdom (UK); Switzerland, Japan; Canada; Taiwan; New Zealand
The event: Singapore announced several sanctions against Russia due to their invasion of Ukraine, stating they “cannot accept the Russian government's violation of the sovereignty and territorial integrity of another sovereign state.” The sanctions include restrictions on Singaporean financial institutions from entering into transactions with four Russian banks and banning exports of electronics, computers, and military items to Russia. Singapore’s decision follows several countries and regions that imposed sanctions on Russia in the last ten days including the US, the EU, Switzerland, the UK, Japan, Canada, Taiwan, and New Zealand.
Analysis & Implications:
It is unlikely that many financial institutions in Singapore, or other countries who have imposed sanctions, have the knowledge or technology to identify shell companies or proxies acting on behalf of sanctioned Russian officials. Russia also likely has connections with financial facilitators in other countries that are not impacted by the sanctions, such as China or Brazil. Economic sanctions directed at Russian officials or oligarchs are very unlikely to disrupt the Russian government's abilities to gather funds and continue its incursion into Ukraine.
Singapore’s decision to impose sanctions on Russia will likely encourage other Southeast Asian countries to act, such as Malaysia or Indonesia. Further sanctions on Russia will almost certainly increase economic pressure on the Russian population as countries cease trading with Russia, meaning the Russian ruble will likely continue to decline. A significant number of Russian citizens will very likely become unemployed as international companies remove or restrict services in Russia, which will almost certainly lead to increased levels of poverty among working and lower-class Russians.
Specialty reports are designed to inform clients of existing and emerging threats worldwide. To defeat terrorists and individuals intent on harming, it is critical to understand and investigate them. We collect and analyze intelligence on terrorists and extremists, their organizations, individuals who are threats, and their tactics and attacks to develop solutions to detect, deter, and defeat any act of terrorism or violence against our client. We also conduct investigations to identify persons of interest, threats, and determine the likelihood of a threat and how to stop them. To find out more about our products and services visit us at counterterrorismgroup.com.
________________________________________________________________________ The Counterterrorism Group (CTG)
 “South Africa Flag” by DavidRockDesign licensed under Pixabay
 Treasury Sanctions South Africa-based ISIS Organizers and Financial Facilitators, US Department of the Treasury, March 2022, https://home.treasury.gov/news/press-releases/jy0616
 Financial crime watchdog adds UAE to 'grey' money laundering watch list, Reuters, March 2022, https://www.reuters.com/world/middle-east/fatf-adds-uae-grey-money-laundering-watchlist-2022-03-04/
 Singapore sanctions Russia over 'unprovoked attack' on Ukraine, Reuters, March 2022, https://www.reuters.com/world/asia-pacific/singapore-sanctions-russia-over-unprovoked-attack-ukraine-2022-03-05/
 Ukraine invasion: What sanctions are different countries around the world imposing on Russia and will they work?, Sky News, March 2022, https://news.sky.com/story/ukraine-invasion-what-sanctions-are-different-countries-around-the-world-imposing-on-russia-and-will-they-work-12554601