Actual steps to combat the Islamic State with your business

This morning I was excited to wake up to a blog post on one of the preeminent foreign policy blogs, War on the Rocks, titled “How the U.S. Business Community Can Take on the Islamic State.” Anxious to read some potentially useful compliance angle towards maintaining a good CFT (“Countering the Financing of Terrorism”) program or a few pointed supply chain due diligence techniques, we are left with this hair-brained guidance by the author:   Today, U.S. businesses should similarly join the fight against the Islamic State. They can do so by suing banks that handle terrorists’ money under antiterrorism and racketeering statutes. Yes, you heard me correctly. This genius’ idea of combating the financing of terrorism is for your company to decide to waste its money on poorly thought out litigation against a series of mysteriously functioning branches in Iraq that serve as correspondent accounts for the Islamic State. I wish I could be kidding you, but frankly, I’m not. The author then goes on to cite the case against Arab Bank Plc, a case that took years of significant litigation relating to 18 U.S.C. § 2331, a section regarding the anti-terrorism act in which US persons can sue for treble damages against an institution that has provided material support as defined elsewhere in the statute (18 U.S.C. § 2339B). The author of this article goes to link ISIS attacks against oil fields in which, ostensibly, US persons have an interest in to be of the same level as litigation under Arab Bank Plc. How does he arrive there? The Islamic State seized at least 110 bank branches in the Levant that maintain correspondent relationships with global banks. Terrorist fundraisers publicly direct donations to other, identified banks in the Gulf and wider Middle East, and terrorists use such banks to launder hostage ransom payments. Some of these banks are subject to personal jurisdiction in the United States and hold substantial assets here. The author cites a FATF report that states that Iraq and Syria have correspondent branches under ISIS control, but a read of the FATF report (I’ve kept the link in the block-quote) shows that Iraq has moved to sever the necessary RMA keys with these branches and has further issued instructions to Iraqi banks on how to proceed. Likewise, in order to qualify under the ATA a plantiff would need two jurisdictional hooks: a) a US person harmed or killed in the attacks and b) a US person to sue. I am unaware of any Syrian banks maintain a presence in the United States and if the Iraqi banks are complying with instructions on how to handle their abdicated branches, it is unlikely that the prosecution could provide facts outlining to “extreme indifference” resulting in material support, similar to the facts of the Arab Bank case. Instead of wasting pixels responding to one of the dumbest articles regarding CFT compliance I’ve read in a while, let’s briefly outline some ways in which not just US companies, but all companies with exposure to this risk can help combat the Islamic State. Implement an effective AML/CFT program that includes a robust KYC framework. Customers’ risk should be assessed not just for AML and sanctions indicators, but also indicators specific to the financing of terrorism. The linked FATF report above does a great job of outlining geographic, industry and typological indicators that can be incorporated in a risk assessment. Certain customers have greater risk exposure to CFT than others, for instance a charity which is located in or has transactional activity near or at areas of known conflict. Develop specific Transaction Monitoring scenarios...

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SDN Moves: OFAC strikes back, Trouble in the Congo, More Kony Womp Womp

A nice turn of pace for SDN activities. Sorry for the delay again.   Counter Narcotics Today OFAC designated a money-laundering cell operating between Peru and Spain (see, it was on purpose I delayed posting until today!…right). Of course, no designation can go without an Analyst Notebook chart for your viewing pleasure. Press release details are moderate, but given the SDNT context it is clear it is for transmission of proceeds from Colombia to Spain. Given the designated’s client list, he appears to be closely associated with the FARC and this goes straight to the point of FARC penetration of Europe via West Africa. I did a study a few years back on this and it seems to be the onward trend. That’s mainly notable because during my briefing I made someone cry… Manuel Aguirre Galindo, an SDN under the SDNTK program and a senior leader for the faltering AFO cartel was confirmed arrested Saturday. Good ole Manny was a senior level AFO member who allegedly oversaw a large financial aspect of their operations. Thus his arrest is a good notch on the belt for any OFAC and AML program. And is it just me, or has AFO been taking the biggest beating lately of all the cartels? Alternately, Stratfor tackles the question of whether the Zetas are really on their way out. They seems to think the Zetas will be around a little longer. I’m not going to object in the short term, but I don’t believe the Zetas will see long term existence. I did an article on why I think this earlier this year.   Counter-Terrorism This week seems to be a trade off between narco and terror. When one heats up, the other pipes down. However we did drone two senior members of al-Shabaab (not designated). ‘Murrica. The UN designated Muhammed Jamal al-Kashef, but he had previously been designated under OFAC and thus should already be in the filter.   Country Programs War crimes poster-boy and Facebook one-hit wonder Joseph Kony watch out, some 18 Bravos have bullets with your name on it. Kony is designated under SDGT. For those interested, State released a Q&A background on the P5+1 negotiations for Iran. I personally haven’t read it and probably won’t for a few days…or ever. But feel free to comment and pique my interest. DRC designated group M23 is starting more trouble in the Congo. Negotiations broke down and now they are getting smacked around by the military of the DRC. Reports are positive but I’m sure the group, or another equally bad one, will retreat into Rwanda and find itself fighting again a year from now. It’s unfortunate as that the talks broke down due to disagreements on amnesty. For these conflicts, Disarmament, Demobilization and Repatriation (DDR) ops are some of the most difficult issues. Having the rebels voluntarily disarm is the best way to guarantee future stability, yet the more brutal a group is the harder it is to forgive. Separating the bad apples from those that can be successfully repatriated is difficult, but when the bad apples are doing the talking its almost impossible to both seek peace and justice simultaneously....

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OFAC Enforcement Action: Another Grand Slam Penalty

Today OFAC released an enforcement action against Alma Investment LLC, a quasi-investment and trading company in the UAE that decided it wanted to violate the ITSR. This case and the penalties seem very similar to another grand slam almost exactly a month ago. While N=2 does not make a pattern, this is the second time OFAC has leveled the full amount of the base penalty under IEEPA against a trading company facilitating transactions with Iran in less than a 30 day period. Both cases were most likely concluded 30 days after the PPN was issued. If OFAC is getting tough against these trading companies, I would suspect that we will start to see an uptick on these enforcement actions. Likewise, OFAC not so subtly couched their rationale for this focus as that “assessing a civil monetary penalty against Alma will have a compliance/deterrence effect by encouraging greater due diligence by foreign financial institutions that maintain accounts for third-country trading companies and/or money transmitters.” Enough said.    ...

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SDN Moves: Snowden leaks, peace talks and not so funny clowns

With OFAC back in action this week, we’ll see how designations pick up in the next couple of weeks. I’m sure OGT is playing catch-up but a designation package isn’t something that’s produced overnight. So in all likelihood everyone is just going to pick up where they left off. As for the world, it’s been another awfully quiet week. A lot of excitement around Iran negotiations, some very weird pre-peace talks in Syria that are most likely fruitless.   Counter-Terrorism Hassan Ghul, a.k.a. Mustafa Hajji Muhammed Khan, an SDGT was confirmed killed by documents released to the Washington Post in the Snowden leaks. Yeah, this happened.   Counter-Narcotics Francisco Rafael Arellano Felix, one of the AFO brothers (but not an SDN…he may have been de-listed but I’m still searching the federal register for historicals) was killed by a sicario in a clown costume. Bonus points for style. The linked article also has a few names of close associates that it would be wise to screen for. Chances are most people at the party have some affiliation with AFO. Now the big question is who ordered the hit? A senior member of the Sinaloa cartel, Jose Fidel Nunez Meza, was arrested. He is not designated and neither are his brothers, also listed in the article. Nonetheless, they are probably good names to add to the filter.   Country-Programs With Iran talks up, there is a lot of questions about acceptable outcomes of the negotiations. Some want Iran to completely dismantle their nuclear program, which I don’t think is an acceptable outcome for Tehran. Ostensibly, U.S. priorities are to ensure that Iran does not have a nuclear weapons capability, so a good negotiating strategy would look to have Iran give up the requisite amount of tech to ensure they can’t have nukes while still being able to retain a peaceful energy capability. In probably the most interesting article I read last week, it seems that the strategy that gives the most marginal utility is to focus on them relinquishing their medical isotope projects. It’s a somewhat statistics heavy article but it reads well and gives a lot of perspective to what the talks will look like. Does anyone know what is up with these proposed peace talks in Syria? I have no clue how that would even work. The FSA, rebellion in general, the government of Syria and all of the members of the Arab League would have to get together to pow-wow, all while being baby-sat by a stability wanting mother (the U.S.) and the worlds equivalent of a drunk and deceiving father (Russia). Count me out....

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SDN Moves: SDGT nabbed in Libya, Al Shabaab firefights, Zetas operating in West Africa

Sorry that I didn’t make the Friday deadline for SDN Moves. We were all very busy on this end and figured we could squeeze it in during the holiday.   Terrorism In sequential raids, U.S. operators nabbed Abu Anas-al Libi, an SDGT designated as a core al-Qaeda member who was responsible for the embassy bombings in 1998. Naturally, the Libyan government protested a bit about their sovereignty but eventually piped down. It’s probably better for them to sweep this under the rug rather than broadcast that they are having troubles maintain positive control over their own territory. Given the current situation in Libya, the fact that high level SDGTs are able to move about freely is disconcerting but will most likely be a trend as Libya rebuilds its policing capabilities. This also brings to light another issue I worried about before Ghadaffi’s ouster. Usually when a country like this experiences a revolution, its important to retain intelligence assets that acted professionally to stand up a new organization, but equally important to get rid of the brutal thugs (i.e. Eastern Europe intelligence reform). The problem with Libya is everyone was basically a thug so they are most likely starting their agencies from scratch. Speaking of lawlessness, SEALs also conducted a raid against al-Shabaab at the same time (while it was against al-Shabaab, the target does not appear to be an SDN but is certainly a name you want in your filter). They encountered resistance and human shields and decided that bounding back was the best course of action. A degree of restraint that many of our enemies don’t have… Likewise, 11 men affiliated with al-Shabaab were arrested in Tanzania on Thursday. Continuing with the lawlessness theme, Human Rights Watch issued a report on the atrocities of SDGTs and FTOs operating in Syria. The report details atrocities of al-Nusra and ISIS, the new offshoot of AQI. While GL 16 places the burden of due diligence on the originator of any funds to the opposition forces, its reports such as this one that drive home why I suggest that financial institutions should conduct extensive due diligence on the transaction in any event. This would include profiles of the intended end user, end user checks and if related to trade at the minimum a look at the invoice, bill of lading and voyage route.   Narcotics The Zeta’s have been reportedly using West Africa as a transit hub for drugs to Europe. This really shouldn’t catch anyone by surprise. The FARC started this last year. Apparently New Jalisco and the Knights Templar are at war now. We’ll see how long this will last. Neither of these groups are prime targets for OFAC, but they should still be monitored. Also not surprising is 13 members of CDG being arrested in Texas. And this, ladies and gentlemen, is why you screen domestic wires as well.   And that’s all folks. Have a great rest of the holiday...

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SDN Moves: Profile of the IRGC head, SDN Successors, Designation-less Week

I’m sorry everyone, but this week’s SDN moves is kind of boring. A big reason is because just in case you’ve been under a rock, OFAC is on the Congressional Incompetence plan and nobody is lighting the fires of Gondor in the annex. Or designating anyone. But a silver lining is that I’m sure a lot of you have gotten to go home on time and not work after hours updating and testing the filter.   Terrorism Mullah Sangeen Zadran, who was expertly droned several weeks back has been succeeded by Bilal Zadran. Bilal is Sangeen’s nephew, continuing on the trend of familial leadership in the Haqqani network.   Narcotics A very quiet week on the Narco front. To my knowledge, no SDNs were killed, captured or embarrassed themselves too much. Not necessarily SDN related, but certainly post-worthy is the closure of the Silk Road. It looks like Bitcoin Bro wasn’t the smartest kid on the block, despite making $80 million in commissions.  However there are other illicit markets out there using cryptocurrencies. Albeit certainly humorous at times (” Do you sell organs/ No just regular pianos/ what are you looking for?”), this AMA of the leader of another illicit online trading forum provides some very interesting insight into the concerns of these businesses, how they operate and the motivations of starting them up. Nonetheless, I hope this is the last time I ever post a link to reddit.   Country Programs Trucking right along, it looks like a lot of the fervor of talks between Rouhani and Obama is starting to settle down to the normal pessimistic crawl. However the New Yorker did an exceptional expose on Qassem Sulameini, the head of the IRGC and an SDN. If there is one article I would suggest you read this week, this would be it. Also, hot off the presses from a friend. Reuters has a report on the Myanma jade industry. Remember, while most trade has been GL’d out, trade in goods under the JADE ACT (jadeite, etc.) are still prohibited as well as dealing with any SDNs. I haven’t read the report (as I said, I literally got it right before I hit the publish button) but I trust my friend’s (another OFAC alum) judgement. So, that about wraps it up. Have a great...

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