Entities and individuals in SA have been identified by the US Treasury department as being involved in a “vast international money-laundering and sanctions network” of 52 individuals and entities operating 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). 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 its law enforcement of these crimes.
Treasury acting director-general Ismail Momoniat said on Tuesday the US action on its own will “not necessarily” worsen SA’s chances of getting the greylisting lifted as 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 impact of the US Treasury’s disruption of an international money-laundering and sanctions-evasion network supporting a Hezbollah financier is “worrying”. SA has been singled out as one of the countries involved.
“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 anti-money-laundering and counter-terrorism financing (AML/CFT) efforts,” George said.
He noted however that “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 the country remaining on the greylist for an indefinite period.”
Countries involved
George raised questions about the possible involvement of SA authorities in the US investigation; and whether the 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 uncovered by the US include Lebanon, United Arab Emirates, Angola, Ivory Coast, the Democratic Republic of the 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 in a statement 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 “specially designated [a] global terrorist” by the US in December 2019 for providing material support to Hezbollah.
Due to last week’s designation by the US Treasury of the individuals and entities in the network, unless otherwise authorised, all property and interests in property of these persons that are in or come within the US or in the possession or control of US persons must be blocked and reported to Ofac.
Enforcement action
“In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also 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 reads that people who engage in certain transactions with these designated persons may also be exposed to sanctions or be 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 reads.
“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 E Nelson. He noted that terrorist financiers, money launderers and sanctions evaders laundered illicit proceeds through the purchase and consignment of luxury goods. These include artworks, diamonds and precious gems.
The US Treasury statement reads that Ahmad uses family members, associates and front companies that 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 reads. It is noted in the statement that since 2012, Ahmad has acquired more than $54m in artworks from major auction houses, galleries and exhibitions, or even directly from artists’ studios.
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 SA-based diamond company Mega Gems 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, 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.
According to the US, Fadi Sader, a dual Canadian-SA national of Lebanese origin, has provided material support to Firas Ahmad. He directs, owns, or controls SA-based Fadico SA.
Mohamad Wehbe, a Lebanese national and co-director of Mega Gems and sole director of Gavia Tradings allegedly provided material support to Firas Ahmad by handling a variety of business operation functions for his SA business ventures. Wehbe was also a director of SA-based real estate holding companies Oxfocento and Diotrix.
Bassem Murad owns, controls and directs SA-based MSD-SPRL Diamond Trading. The US says he conducted transactions or acted as a pass-through for funds in the interest of Firas Ahmad in a money-laundering layering scheme.
All these individuals and companies have been designated by Ofac.
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