Terrorism

The penalty:

Western Union Financial Services, Inc. Settles Potential Civil Liability for Apparent Violations of the Global Terrorism Sanctions Regulations. Western Union Financial Services, Inc. (“Western Union”), a money services business (MSB) headquartered in Denver, Colorado, has agreed to pay $401,697 to settle its potential civil liability for 4,977 apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR).

OFAC determined that Western Union voluntarily self-disclosed the apparent violations to OFAC, and the apparent violations constitute a non-egregious case. The statutory maximum civil monetary penalty amount for the apparent violations was $1,244,250,000, and the base civil monetary penalty amount for the apparent violations was $637,614.

The facts of the case:

Between December 9, 2010, and March 13, 2015, a bank (“the bank”) in The Gambia was one of Western Union’s principal Master Agents in The Gambia. In or around 2006, the bank established a Sub-Agent relationship with Kairaba Shopping Center (KSC), an entity that was subsequently designated by OFAC pursuant to the Global Terrorism Sanctions Regulations (GTSR) on December 9, 2010.

At the time the relationship with KSC was established, the bank provided Western Union with information relating to KSC. Western Union stored this information in its systems as an agent location of the bank, and not as a discrete legal entity acting as a sub-agent. During the entirety of the review period, in addition to its real-time transaction screening of remitters and beneficiaries, Western Union had a process to screen Master Agents and related sub-agents under the Master Agent structure. However, for the majority of the review period, Western Union did not screen location data for sanctions-related issues as part of its review process.

Western Union became aware that KSC was a potential sub-agent in early February 2015, but mistakenly believed at that time that KSC had operated from a single location, which was no longer active as of that date. On March 25, 2015, Western Union identified a second, active KSC location, and immediately suspended its relationship with KSC and deactivated its access to the Western Union network.

Between December 9, 2010, and March 13, 2015, Western Union processed 4,977 transactions totaling approximately $1.275 million, which were paid out to third-party, non-designated beneficiaries who chose to collect their remittances at KSC.

OFAC determined that Western Union processed transactions involving a Specially Designated National (SDN) for more than four years following the entity’s designation by OFAC, and that after Western Union discovered that this Sub-Agent was an SDN, failed to deactivate KSC’s access to the Western Union network immediately due to its mistaken belief that the Sub-Agent was already inactive. However, starting in 2013, two years prior to discovering the apparent violations, Western Union began a project to remediate the root cause of the apparent violations.

How we got the final settlement amount:

The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

OFAC considered the following to be aggravating factors:

(1) Western Union acted with reckless disregard for U.S. sanctions requirements by failing to immediately identify both KSC locations in searches conducted after it discovered that this Sub-Agent was an SDN, which resulted in a failure to deactivate KSC’s access to the Western Union network immediately;

(2) Western Union engaged in a pattern of conduct that involved processing transactions involving an SDN for more than four years following the entity’s designation by OFAC;

(3) Based on a review of all readily available information and with the exercise of reasonable due diligence, Western Union had reason to know that its Sub-Agent, KSC, was on the SDN List;

(4) By processing these transactions and allowing KSC to continue operating as a Western Union Sub-Agent and provide remittance services to its customers through a U.S. MSB, Western Union caused substantial harm to the sanctions program objectives, including by conferring economic or other benefit to an SDN and undermining the policy objectives of the GTSR; and

(5) Western Union is a large and commercially sophisticated international financial institution.

OFAC found the following to be mitigating factors:

(1) Western Union has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations;

(2) Western Union had a global sanctions policy in place at the time of the apparent violations that required its Master Agents to comply with the sanctions programs administered by OFAC and vet its Sub-Agents — a policy that seemed to be effective except in this instance;

(3) Prior to the apparent violations, Western Union had implemented a corrective action plan to close an identified gap in its internal controls related to sub-agent due diligence and screening.

(4) Following the discovery of the apparent violations, Western Union took additional remedial actions, including performing an immediate one-time screening of its Sub-Agent and location data, which did not identify any other Sub-Agents or locations that were on the SDN List; and

(5) Western Union cooperated with OFAC’s investigation by voluntarily self-disclosing the apparent violations and by executing and agreeing to extend multiple times a statute of limitations tolling agreement.

And the final paragraph dovetails nicely with the recently-published Framework document (convenient, no?):

In addition to the above, and as part of its settlement with OFAC, Western Union has agreed to sustain its commitment to implementing robust compliance procedures by ensuring that it continues to have a management team in place that: (1) is committed to a culture of compliance; (2) conducts regular risk assessments; (3) ensures that its internal controls appropriately mitigate its sanctions-related risks; (4) conducts regular audits; and (5) provides ongoing sanctions compliance training throughout the organization.

Mr. Watchlist wonders what the line is between “reckless” and either “careless” or “negligent”… because it seems that Western Union was at worst, negligent or incompetent. And there’s a big gap between that and “reckless”…. just saying.

Link:

OFAC Enforcement Information

Yesterday, OFAC designated the following 2 persons:

ABD AL-HAMID AL-ASADI, Makki Kazim (a.k.a. ABDUL HAMEED AL ASADI, Makki Kadhim), Basrah, Iraq; DOB 10 Oct 1957; Additional Sanctions Information – Subject to Secondary Sanctions (individual) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE). 

 

SALIH AL HASANI, Mohammed Hussein (a.k.a. AL-HUSAYNI, Mohammed Hossein); DOB 01 Jul 1954; Additional Sanctions Information – Subject to Secondary Sanctions; Passport A9298980 (Iraq) (individual) [SDGT] [IFSR] (Linked To: SOUTH WEALTH RESOURCES COMPANY).

and an entity:

SOUTH WEALTH RESOURCES COMPANY (a.k.a. MANABEA THARWAT AL-JANOOB GENERAL TRADING COMPANY, LLC; a.k.a. SHIRKAT MANABI’ THARAWAT AL-JANUB LILTIJARAH AL-‘AMMAH; a.k.a. SOUTH WEALTH RESOURCES LTD.), Al Jadriya District, Baghdad, Iraq; Additional Sanctions Information – Subject to Secondary Sanctions [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).

under both the Iran sanctions regime and that for counter terrorism.

And the Treasury Department issued the following press release:

PRESS RELEASES

Treasury Targets IRGC-Qods Force Financial Conduit in Iraq for Trafficking Weapons Worth Hundreds of Millions of Dollars

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on an Iraq-based Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) financial conduit, South Wealth Resources Company (SWRC), which has trafficked hundreds of millions of dollars’ worth of weapons to IRGC-QF-backed Iraqi militias.  SWRC and its two Iraqi associates, who are also being designated today, have covertly facilitated the IRGC-QF’s access to the Iraqi financial system to evade sanctions.  This scheme also served to enrich previously sanctioned Abu Mahdi al-Muhandis, an Iraqi advisor to IRGC-QF Commander Qasem Soleimani, who has run weapons smuggling networks and participated in bombings of Western embassies and attempted assassinations in the region.  SWRC and its two associates are being designated as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.

“Treasury is taking action to shut down Iranian weapons smuggling networks that have been used to arm regional proxies of the IRGC Qods Force in Iraq, while personally enriching regime insiders,” said Treasury Secretary Steven T. Mnuchin. “The Iraqi financial sector and the broader international financial system must harden their defenses against the continued deceptive tactics emanating from Tehran in order to avoid complicity in the IRGC’s ongoing sanctions evasion schemes and other malign activities.”

The IRGC-QF, designated pursuant to E.O. 13224 on October 25, 2007, is a branch of the IRGC responsible for external operations and has provided material support to numerous terrorist groups, including the Taliban, Lebanese Hizballah, HAMAS, and Palestinian Islamic Jihad, making it a key component of Iran’s destabilizing regional activities.  The IRGC-QF’s parent organization, the IRGC, was designated pursuant to E.O. 13224 on October 13, 2017, and on April 15, 2019 was designated as a Foreign Terrorist Organization by the Secretary of State.

SOUTH WEALTH RESOURCES COMPANY

The IRGC-QF has used Iraq-based SWRC, also known as Manabea Tharwat al-Janoob General Trading Company, as a front to smuggle hundreds of millions of dollars’ worth of weapons to its proxies inside Iraq, while also generating profit in the form of commission payments for Abu Mahdi al-Muhandis, an OFAC-sanctioned advisor to IRGC-QF commander Qasem Soleimani, and two associates of SWRC who are also being designated today.  In addition to facilitating the IRGC-QF’s weapons smuggling into Iraq, SWRC has moved millions of dollars to Iraq for illicit financial activity benefitting the IRGC-QF and its Iraq-based militia groups.

SWRC is being designated today pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, the IRGC-QF.

MAKKI KAZIM ‘ABD AL HAMID AL ASADI AND MUHAMMED HUSSEIN SALIH AL HASANI

OFAC also is designating Makki Kazim ‘Abd Al Hamid Al Asadi (Makki Kazim Al Asadi) and Muhammed Husayn Salih al-Hasani (al-Hasani), two Iraq-based individuals who helped facilitate IRGC-QF shipments and financial operations via SWRC.  Both individuals and Abu Mahdi al-Muhandis received commission payments for contracts with SWRC.

Makki Kazim Al Asadi has acted as an intermediary to facilitate IRGC-QF shipments destined for Iraq, and has helped the IRGC-QF access the Iraqi financial system to evade sanctions.  Makki Kazim Al Asadi is being designated pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, the IRGC-QF.

Muhammed Hussein Salih Al Hasani is the authorized agent and representative of SWRC, which he registered in Iraq in 2013.  He has signed weapons contracts for SWRC.

Al Hasani is being designated pursuant to E.O. 13224 for acting for or on behalf of SWRC.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action.  Furthermore, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transactions for any of the individuals or entities designated today could be subject to U.S. sanctions.

Links:

OFAC Notice

Treasury Press Release

Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

Early Alert on United Nations Sanctions

The sanctions committee of the United Nations Security Council (“UNSC”) which administers the sanctions regime for ISIL (Da’esh) and Al-Qaida added one entity to and removed one individual from its sanctions list Note 1, 2 on 14 May 2019 (New York time).  Please refer to the relevant press releases issued by the UNSC in Attachment 1.

Licensed corporations (“LCs”) and associated entities (“AEs”) should update their screening databases with the above changes made by the UNSC sanctions committee for sanctions screening of customers and payments.  LCs and AEs are reminded to refer to our circular on United Nations Sanctions issued on 7 February 2018 Note 3 which sets out our expectations on actions that LCs and AEs should take regarding sanctions imposed by the UNSC.

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong at 2231 1569 who will assist to refer your queries to the relevant officer.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/025/2019

Note 1 An updated list specifying “individuals, groups, undertakings and entities”, reflecting the amendments by the sanctions committee of the UNSC, was published under section 25 of the United Nations Sanctions (ISIL and Al-Qaida) Regulation (Cap. 537CB) on the website of the Commerce and Economic Development Bureau on 15 May 2019. The list obtained from the website of the Commerce and Economic Development Bureau is attached in Attachment 2.
Note 2
 Licensed corporations and associated entities will also be alerted when the updated sanctions list, reflecting the amendments by the sanctions committee of the UNSC, is published under the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) in the Gazette. The website of the Securities and Futures Commission (“SFC”) will also be updated to provide a weblink to the gazette notice thereof for easy reference.
Note 3
 The circular on United Nations Sanctions can be accessed on the SFC’s website (http://www.sfc.hk/edistributionWeb/gateway/EN/circular/aml/aml-regulations/doc?refNo=18EC9)

Links:

HK SFC Circular

UN Press Releases (Attachment 1)

Commerce and Economic Development Bureau List (Attachment 2)

On Wednesday, UK regulators implemented Commission Implementing Regulation (EU) 2019/850 by removing the following person:

MOHAMMED, Mazen Salah

DOB: (1) 01/01/1982. (2) 01/01/1980. (3) 18/05/1981. POB: (1) Baghdad (2) Arbil, (1) (2) Iraq a.k.a: (1) ALI HUSSEIN, Mazen (2) MUHAMAD, Issa, Salah Nationality: Iraqi Passport Details: German travel document (Reiseausweis) A 0144378 (revoked as at Sep 2012) Address: Hauzenberg, Germany, 94051.Other Information: UN Ref QI.A.202.05. Member of Ansar Al-Islam. Released from custody in Germany on 18 May 2012 Listed on: 07/12/2005 Last Updated: 06/12/2012 29/05/2019 Group ID: 8784.

from the ISIL (Da’esh) and Al-Qaida counter terrorism sanctions program.

Link:

OFSI Notice

Commission Implementing Regulation (EU) 2019/850

This is OFAC’s 27th “Annual Report to the Congress on Assets in the United States Relating to Terrorist Countries and Organizations Engaged in International Terrorism” – a mouthful, I know.

Some highlights:

  • $46.181 million in blocked terrorist organization assets, up from $43.606 million in 2017
  • Biggest increases in this group – Hizballah blocked assets increased from $9.814 million to $11.601 million, Hamas went from $1.143 million to $1.364 million, the IRGC-Quds Force increased from $14.491 million to $14.989 million, ISIL went from $251,613 to $657,689, Lashkar-e Tayyiba increased from $218,639 to $397,774, and the Taliban increased from $10,728 to $206,805.
  • State Sponsors of Terrorism have $216.83 million in blocked funds, up from $201.53 million in 2017
  • Of that increase, the overwhelming bulk is due to North Korea (almost $11 million), with Iran ($2.9 million) and Syria ($1.4 million) making up the rest
  • State Sponsors of terrorism own a bit of real estate: Syria owns 4 properties, Iran 11, and Bank Melli indirectly has an ownership interest in a NY building

Link:

Calendar Year 2018 Terrorist Assets Report

On Wednesday, Canadian regulators removed:

QDi.202 Name: 1: MAZEN 2: SALAH 3: MOHAMMED 4: na
Name (original script): مازن صلاح محمد
Title: na Designation: na DOB: 18 May 1981 POB: Arbil, Iraq Good quality a.k.a.: a) Mazen Ali Hussein born 1 Jan. 1982 in Baghdad, Iraq b) Issa Salah Muhamad born 1 Jan. 1980 Low quality a.k.a.: na Nationality: IraqPassport no: German travel document (“Reiseausweis”) A 0144378 (revoked as at Sep. 2012) National identification no: na Address: 94051 Hauzenberg, Germany Listed on: 6 Dec. 2005 (amended on 21 Oct. 2008, 13 Dec. 2011, 15 Nov. 2012, 1 May 2019) Other information: Member of Ansar Al-Islam (QDe.098). Released from custody in Germany on 18 May 2012. Review pursuant to Security Council resolution 1822 (2008) was concluded on 30 Jul. 2009. Review pursuant to Security Council resolution 2253 (2015) was concluded on 21 Feb. 2019. INTERPOL-UN Security Council Special Notice web link: www.interpol.int/en/How-we-work/Notices/View-UN-Notices-Individuals

The names of individuals and entities removed from the ISIL (Da’esh) and Al‑Qaida Sanctions List pursuant to a decision by the Committee may be found in the “Press Releases” section on the Committee’s website.  Other information about the ISIL (Da’esh) and Al-Qaida Sanctions List may also be found on the Committee’s website at the following URL: www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list/procedures-for-delisting.

The ISIL (Da’esh) and Al-Qaida Sanctions List is updated regularly on the basis of relevant information provided by Member States and international and regional organizations. An updated List is accessible on the ISIL (Da’esh) and Al-Qaida Sanctions Committee’s website at the following URL:  www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list.

The Consolidated United Nations Security Council List is also updated following all changes made to the ISIL (Da’esh) and Al-Qaida Sanctions List. An updated version of the Consolidated List is accessible via the following URL: www.un.org/securitycouncil/content/un-sc-consolidated-list.

from their counter terror sanctions program, after their delisting by the United Nations ISIL (Da’esh) and Al-Qaida Sanctions Committee. Note that the OSFI page says 4 persons were removed, which is in error.

Links:

OSFI Notice

UN Notice

Last Friday, UK regulators implemented Commission Implementing Regulation (EU) 2019/791 by amending the following ISIL (Da’esh) and Al-Qaida counter terror listing:

ISLAMIC STATE IN IRAQ AND THE LEVANT – KHORASAN (ISIL-K)

a.k.a: (1) ISIL Khorasan (2) ISIL’s South Asia Branch (3) ISIS Wilayat Khorasan (4) Islamic State’s Khorasan Province (5) South Asian Chapter of ISIL Other Information: UN Ref QDe.161. (Listing to be treated as temporary for 30 days from the date of listing by the UNor until the EU adds the new listing to an existing sanctions regulation (whichever is sooner) in accordance with Policing and Crime Act 2017). [UN Listing (formerly temporary listing, in accordance with Policing and Crime Act 2017)]. Listed on: 15/05/2019 Last Updated: 15/05/2019 17/05/2019 Group ID: 13788.

Under the same regulation, they also removed:

SALEH AL-SAADI, Nessim Ben Mohamed Al-Cherif Ben Mohamed

DOB: (1) 30/11/1974. (2) 20/11/1974. POB: (1) Haidra Al-Qasreen (2)-(3) -, (1) Tunisia (2) Lebanon (3)Algeria a.k.a: (1) GEORGE, Dia, el Haak (2) GEORGE, Diael, Haak (3) GEORGE, El Dia, Haak (4) SAADI, Nassim Nationality: Tunisian Passport Details: M788331 (Tunisian). Issued on 28 Sept 2001. Expired on 27 Sept 2006 Address: (1) Via Cefalonia 11, Milan, Italy (Domicile, last known address).(2) Via Monte Grappa 15, Arluno, Milan, Italy.Other Information: UN Ref QI.S.148.03. Arrested on 9 Oct 2002. In detention in Italy until 27 Apr 2012. Sentenced in absentia to 20 years of imprisonment by the Tunis Military Court on 11 May 2005 for membership of a terrorist organisation. Father’s name is Mohamed Sharif. Mother’s name is Fatima. Also referred to as Abou Anis and Abu Anis. Listed on: 18/11/2003 Last Updated: 17/06/2011 17/05/2019 Group ID: 7871.

from the same program.

Links:

OFSI removal notice

OFSI amendment notice

Commission Implementing Regulation (EU) 2019/791