US cracks down on SA-linked crimes
• Greylist removal at risk • People in SA ‘designated’
Entities and individuals in SA have been identified by the US treasury department as involved in a “vast international money laundering and sanctions network” of 52 individuals and entities in several countries.
The inclusion of SA as one of the bases for the network could be bad news for its push to be removed from the greylist of the Financial Action Task Force (FATF). The FATF, which sets international standards for the combating of money laundering and terrorism financing, placed SA on its greylist earlier this year due to deficiencies in law enforcement in these crimes.
Treasury acting directorgeneral Ismail Momoniat said on Tuesday the US action would “not necessarily” worsen SA’s chances of getting the greylisting lifted as the FATF will look at what SA’s intelligence agencies did with the US information. SA will have to conduct its own investigations, he said. “We have to make our own decisions.”
Compli-Serve SA compliance manager James George said the way in which the US treasury’s disruption of an international money-laundering and sanctions-evasion network in support of a Hezbollah financier may play out, was worrying.
“If the US Treasury’s action results in significant disruption of the network’s illicit financial activities, including those related to money laundering and sanctions evasion, it could be seen as a positive development by the FATF and other international bodies involved in antimoneylaundering and counterterrorism financing [AML/CFT] efforts,” George said.
However, “if a country fails to detect an illicit international money laundering and sanctions evasion network, it could be seen as a deficiency in its AML/ CFT regime. Such a failure could result in [it] remaining on the greylist for an indefinite period”.
George raised questions about the possible involvement of SA authorities in the US investigation; and whether SA officials have the necessary resources, tools, or training to identify and investigate sophisticated money laundering and sanctions evasion schemes, particularly those with international connections.
Other countries involved in the network include Lebanon, United Arab Emirates, Angola, Ivory Coast, the Democratic Republic of Congo, Belgium, UK and Hong Kong.
The network has been designated by the US treasury’s Office of Foreign Assets Control (Ofac) for assisting Nazem Said Ahmad in evading US sanctions to maintain his ability to finance the militant Lebanese group Hezbollah and his luxurious lifestyle. “Designation” refers to terrorists or those supporting them.
The treasury said last week that the network facilitated the payment, shipment and delivery of cash, diamonds, precious gems, art, and luxury goods for the benefit of Ahmad, who was a “specially designated global terrorist” by the US in December 2019 for providing material support to Hezbollah.
Last week’s designation by the US of the individuals and entities in the network means that unless otherwise authorised, all property and interests in property of these persons that are in or come within the US or are in the possession or control of US persons must be blocked and reported to Ofac.
“In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are blocked ... Ofac regulations generally prohibit all dealings by US persons or within the US (including transactions transiting the US) that involve any property or interests in property of designated or otherwise blocked persons.”
The US treasury statement said persons who engaged in certain transactions with these designated persons may also be exposed to sanctions or subject to an enforcement action.
“Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the targets designated today could be subject to US sanctions,” the statement said.
“The individuals involved in this network used shell companies and fraudulent schemes to disguise Nazem Said Ahmad’s role in financial transactions,” said under secretary of the treasury for terrorism and financial intelligence Brian Nelson. He noted that terrorist financiers,
money launderers, and sanctions evaders launder illicit proceeds through the purchase and consignment of luxury goods. These include works of art, diamonds and precious gems.
The US treasury statement noted Ahmad uses family members, associates and front companies to transact on his behalf.
“The network also uses aliases, front companies, and fraudulent paperwork to enable Ahmad to purchase or consign high-priced luxury goods and artwork from auction houses and galleries worldwide,” the statement said. It noted that since 2012, Ahmad had acquired more than $54m in artworks.
Those designated in SA include Firas Ahmad, Ahmad’s son who handles many of his father’s business affairs in the country. He is a director of SAbased diamond company Mega Gems (Pty) Ltd and controls another diamond company, Thula Uzwe Trading, also in SA.
The US said Firas Ahmad obfuscated his ultimate beneficial ownership of Mega Gems through a front company, Oriental Dynasty Ltd, directed by his wife, Rim Nasser who acted as a nominee shareholder.
Nazem Said Ahmad s brother-in-law Rami Baker is a trustee of 76 Benmore Gardens Trust that manages the ’expansive property portfolio owned by the Ahmad family in the Johannesburg area, including the home inhabited by Firas Ahmad, Nasser, and their family.
The US says Fadi Sader, a dual Canadian-SA national of Lebanese origin, has provided material support to Firas Ahmad. He directs, owns, or controls SAbased Fadico SA CC.
Mohamad Wehbe, a Lebanese national and co-director of Mega Gems and sole director of Gavia Tradings (Pty) Ltd provided material support to Firas Ahmad by handling a variety of business operation functions for his business ventures in SA. Wehbe is also a director of SAbased real estate holding companies Oxfocento (Pty) Ltd and Diotrix (Pty) Ltd.
Bassem Murad owns, controls and directs SA-based MSD-SPRL Diamond Trading. The US says he conducted transactions or acted as a passthrough for funds in the interest of Firas Ahmad in a money laundering layering scheme.