Treasury Launches the Counter-Hizballah International Partnership (CHIP) to Thwart Illicit Financial Activity

WASHINGTON.- This week the Treasury Department convened the first meeting of the Counter-Hizballah International Partnership (CHIP) to build multilateral cooperation for targeting Hizballah’s global financial networks. Over 30 countries representing the Middle East, the Western Hemisphere, Europe, Asia, and Africa participated in this event, which was held on the sidelines of the World Bank/International Monetary Fund Fall Meetings.

“Hizballah leverages a network of financiers and supporters around the world to fund its violent agenda. The CHIP unites the international community in an aggressive campaign to confront Hizballah’s evolving schemes to better protect the international financial system from exploitation,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.

“The CHIP is an important initiative to share information and build capacity among our partners to more effectively leverage all available financial tools against Hizballah.”

At the meeting, the United States condemned Hizballah’s abuse of the international financial system and identified impact-oriented steps countries should take to stem this abuse, including information sharing information among financial intelligence units, strengthening terrorism finance risk assessments, developing targeted financial sanctions regimes, and prosecuting terrorists and their financial facilitators.

Participating countries noted the importance of raising Hizballah in international fora to build momentum and ensure coordination of efforts. The next steps for meeting participants will be to send technical experts to the Law Enforcement Coordination Group (LECG), which will next convene December 17-18 in The Hague, Netherlands.

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Financial Action Task Force (FATF) Reiterates Terror Finance Risks in Iran, Clarifies “Stablecoin” Guidance, Issues AML/CFT Reports

PARIS.- Today the Financial Action Task Force (FATF) concluded its 31st plenary meeting with a public statement that, among other things, reiterates terrorist financing risks emanating from Iran. The FATF also clarified guidance on “stablecoins” and adopted virtual assets changes, among other reports related to anti-money laundering/countering the financing of terrorism (AML/CFT).

“For more than three years, Iran has repeated empty promises to the international community to stop financing terrorism and fix its corrupt and opaque financial system,” said Marshall Billingslea, Treasury Assistant Secretary for Terrorist Financing and Financial Crimes. “The Financial Action Task Force has determined that enough is enough. More countermeasures on Iran are now in force, and countries will be called upon to impose further financial restrictions to protect the international financial system if Iran hasn’t ratified and fully implemented the key treaties related to fighting money laundering and terrorist financing.”

FATF Re-Imposes Several Counter-Measures on Iran
The FATF re-imposed several counter-measures on Iran designed to protect the international financial system from abuse, and committed to continue monitoring Iran’s Action Plan. It also warned that by February 2020, Iran must ratify the Palermo and Terrorist Financing Conventions in line with FATF standards or the FATF will fully lift the suspension of countermeasures.

FATF Clarifies Guidance on “Stablecoins” and Virtual Assets
As a follow-up to the groundbreaking changes to FATF standards regarding virtual assets adopted under the U.S Presidency (July 2018 – June 2019), the FATF today also adopted changes to its methodology that specify how countries and covered entities will be assessed for their compliance with the relevant recommendations. These changes apply immediately to all future assessments as well as follow-up reports for countries that have already undergone an assessment. The FATF also issued a public statement clarifying that the FATF standards apply to “stablecoins” and their service providers. The FATF is actively monitoring emerging digital assets and agreed to examine their characteristics and risks, and consider further clarifications on how the FATF standards apply to global “stablecoins” and their service providers.

FATF Updates Report on ISIL and Al-Qaeda
To assist FATF members and the FATF global network in combating ISIL and Al-Qaeda financing, the FATF also adopted its eleventh non-public update on the financing of ISIL/Daesh, Al-Qaeda and affiliate groups. This report details the evolving financial relationship between remaining Daesh leadership in Iraq and Syria and its affiliate groups, as well as how Daesh continues to exploit poorly supervised and unregistered money transmitters to move funds to finance its terrorism around the world.

Identifying Countries with Strategic AML/CFT Deficiencies
The FATF also called on all countries to apply countermeasures on North Korea due to the ongoing money laundering, terrorist financing, and weapons of mass destruction proliferation financing risks to the international financial system. In addition, the Plenary identified countries that are working with the FATF to implement an Action Plan and strengthen their domestic frameworks. FinCEN will release an advisory updating financial institutions to the FATF list of jurisdictions with strategic AML/CFT deficiencies.

Adoption of Mutual Evaluation Reports of Russia and Turkey
The Mutual Evaluation Reports of Russia and Turkey were also adopted and will be published on the FATF website by the end of the year, representing the culmination of a peer review by FATF members to assess both jurisdictions’ AML/CFT and counter-proliferation financing legal frameworks as well as the measures in place to implement these frameworks effectively.

Outcomes of the FATF Plenary, 16-18 October 2019.

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Treasury Developing New Authorities to Target Turkey for Any Potential Human Rights Abuses or Destabilizing Actions in Syria

WASHINGTON.- Given Turkey’s ongoing military offensive in northeastern Syria, President Donald J. Trump intends to sign an Executive Order to dissuade Turkey from any further offensive military action in northeast Syria, including but not limited to indiscriminate targeting of civilians, targeting of civilian infrastructure, targeting of ethnic or religious minorities, or targeting or other actions that undermine the continued counterterrorism activities of the Syrian Democratic Forces.

It is imperative that Turkey not allow even a single ISIS fighter to escape.

The Order will delegate to the Secretary of the Treasury, in consultation with the President and the Secretary of State, authority to designate individuals and entities of the Government of Turkey involved in human rights abuses or actions leading to the further deterioration of peace, security, and stability in northeastern Syria.

The Order also will give the Secretary of the Treasury the authority to impose secondary sanctions on those engaging in knowing and significant transactions with designated individuals and entities of the Government of Turkey.

“At the direction of President Trump we will be targeting specific Turkish individuals or departments as needed,” said Secretary Steven T. Mnuchin. “This is a notice to banks and other parties to be on notice of potential actions.”

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Treasury Designates Turkish Ministries and Senior Officials in Response to Military Action in Syria

WASHINGTON.- Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against two ministries and three senior Turkish Government officials in response to Turkey’s military operations in Syria.

The Turkish Government’s actions are endangering innocent civilians, and destabilizing the region, including undermining the campaign to defeat ISIS. The Government of Turkey’s Ministry of National Defence and the Ministry of Energy and Natural Resources, as well as the Minister of National Defence, Minister of Energy and Natural Resources, and the Minister of the Interior are blocked as a result of today’s action.

The designation of these ministries and officials is a result of the Turkish Government’s actions that further deteriorate peace, security, and stability of the region. We are prepared to impose additional sanctions on Government of Turkey officials and entities, as necessary.

“The United States is holding the Turkish Government accountable for escalating violence by Turkish forces, endangering innocent civilians, and destabilizing the region,” said Treasury Secretary Steven Mnuchin.

In addition, persons that engage in certain transactions with persons designated today may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates any significant financial transactions for or on behalf of the persons designated today could be subject to U.S. correspondent or payable through account sanctions.

Today’s actions are not intended to affect or disrupt the operation of international humanitarian NGOs or the United Nations in Turkey in rendering humanitarian assistance to Syrian communities in need.

OFAC is prepared to issue authorizations, such as general or specific licenses, as appropriate, to ensure that today’s action does not disrupt Turkey’s ability to meet its energy needs.

Additionally, OFAC issued three General Licenses simultaneously with today’s Executive Order. General License 1 authorizes the conduct of the official business of the United States Government by employees, grantees, or contractors otherwise prohibited by the order. General License 2 authorizes a 30 day wind down period for all transactions and activities that are ordinarily incident and necessary to the wind down operations, contracts, or other agreements involving the Ministries of National Defence or Energy and Natural Resources of the Government of Turkey. General License 3 authorizes official activities of the United Nations involving the Ministry of National Defence or the Ministry of Energy and Natural Resources of the Government of Turkey.

Designation Bases and Authorities

Republic of Turkey Ministry of National Defence is being designated pursuant to E.O. of October 14, 2019, for being a subdivision, agency, or instrumentality of the Government of Turkey.

Republic of Turkey Ministry of Energy and Natural Resources is being designated pursuant to E.O. of October 14, 2019, for being a subdivision, agency, or instrumentality of the Government of Turkey.

Hulusi Akar, the Minister of National Defence of the Republic of Turkey, is being designated pursuant to E.O. of October 14, 2019, for being a current or former official of the Government of Turkey.

Suleyman Soylu, the Minister of Interior of the Republic of Turkey, is being designated pursuant to E.O. of October 14, 2019, for being a current or former official of the Government of Turkey.

Fatih Donmez, the Minister of Energy of the Republic of Turkey, is being designated pursuant to E.O. of October 14, 2019, for being a current or former official of the Government of Turkey.

As a result of today’s action, all property and interests in property of these persons, and of any other persons blocked by operation of law, that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. E.O. October 14, 2019, and OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interest in property of blocked persons.

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Treasury Sanctions Businessmen in South Sudan for Corrupt Dealings with Government Officials and Sanctions Evasion  

WASHINGTON.- Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Ashraf Seed Ahmed Al-Cardinal (Al-Cardinal) and Kur Ajing Ater (Ajing) for their involvement in bribery, kickbacks and procurement fraud with senior government officials. OFAC is also designating five companies determined to be owned or controlled by Al-Cardinal, and one company owned or controlled by Ajing. OFAC designated these individuals and entities pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption.

“These South Sudanese elites and corrupt government officials have drained state coffers and usurped the country’s resources with impunity. Al-Cardinal and Ajing leverage their businesses and political connections to engage in corruption at great expense to the South Sudanese people,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence. “The South Sudanese government must take urgent measures to increase transparency and enforce accountability against those involved in systemic corruption. Privileged elites should not be allowed to profit from conflict as they undermine efforts to bring lasting peace to South Sudan.”

As a result of today’s action, all property and interests in property of the individuals and entities named below, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other designated persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. In addition, any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by E.O. 13818 if performed by a U.S. person or within the United States would be prohibited.

ASHRAF SEED AHMED AL-CARDINAL

Sudanese businessman Al-Cardinal has been used by a senior South Sudanese government official as an intermediary to deposit and hold a large amount of funds in a country outside of South Sudan. Following OFAC’s designation of Benjamin Bol Mel in December 2017, the senior South Sudanese official began to use a bank account in the name of one of Al-Cardinal’s companies to store his personal funds in an attempt to avoid the effects of potential sanctions designations. Further, in early 2019, the South Sudanese government made millions of dollars in payments to a company owned by Al-Cardinal; while the official reason was for the payment for food, the money instead went to senior South Sudanese government officials. Other South Sudanese government officials have expressed dissatisfaction with the massive corruption in the South Sudanese government, noting that although large amounts of money were paid to Al-Cardinal for supplies and provisions, government forces never seemed to be adequately supplied.

Separately, a company partially owned by Al-Cardinal has been publicly implicated in the importation of amphibious armored vehicles into South Sudan that gave the Government of South Sudan the ability to extend offensives that included violent attacks on innocent civilians.

Five companies owned or controlled by Al-Cardinal were also designated today: Alcardinal General Trading Limited, Alcardinal General Trading LLC, Al Cardinal Investments Co. LTD, Alcardinal Petroleum Company limited, and NILETEL.

Al-Cardinal is being designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

KUR AJING ATER

Ajing is a South Sudanese businessman who has bribed key officials in the Government of South Sudan in order to maintain influence and access to the South Sudanese oil market. Ajing used these bribes to both curry favor with a senior gatekeeper within the Government of South Sudan and to ensure the silence and compliance of a key government officials. In late 2018, the South Sudanese government made a large cash payment to Ajing. While the official reason was for the payment of food, the money instead went directly to a senior South Sudanese government official. In addition, Ajing has been obligated large amounts of oil by the Government of South Sudan, and has given money and vehicles to government officials in return. Ajing has claimed to have paid senior officials millions of dollars and has cooperated with the request of a senior official to route oil payments in cash rather than through official bank accounts. Further, Ajing was the recipient of a multi-year contract to purchase food for the South Sudanese military, and in return, paid a percentage of the contract back to a senior South Sudanese government official. According to public media reports, Ajing received millions of dollars in contracts for the South Sudanese military, including one contract that alone exceeds the total amount budgeted for the military’s goods and services for the year by a factor of ten.

Ajing is being designated for having materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery. One company owned or controlled by Ajing was also designated today: Lou Trading and Investment Company Limited.

GLOBAL MAGNITSKY

Building upon the Global Magnitsky Human Rights Accountability Act, on December 20, 2017, the President signed E.O. 13818, in which the President found that the prevalence of human rights abuse and corruption which have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity that it threatens the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

To date, the Department of the Treasury has designated 122 individuals and entities under E.O. 13818. This figure is in addition to the numerous human rights or corruption related designations Treasury has issued under other various authorities. In total, since January of 2017, Treasury has taken action against more than 680 individuals and entities with links to human rights abuse or corruption.

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