InfoBytes Blog
OFAC designates evasion network supporting Hizballah financier
On April 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13224, as amended, against a “vast international money laundering and sanctions evasion network” comprised of 52 individuals and entities in Lebanon, the United Arab Emirates, South Africa, Angola, Côte d’Ivoire, the Democratic Republic of the Congo, Belgium, the United Kingdom, and Hong Kong. The designated network assisted a Hizballah financier and Specially Designated Global Terrorist (previously sanctioned by OFAC in 2019) in evading U.S. sanctions by facilitating the payment, shipment, and delivery of goods and services, including cash, diamonds, art, and luxury goods, for the benefit of the sanctioned individual who used the funds to finance the Hizballah financier and his lifestyle, OFAC said, explaining that the network used shell companies and fraudulent schemes to disguise the Hizballah financier’s role in the financial transactions. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson warned in the announcement that “[l]uxury good market participants should be attentive to these potential tactics and schemes, which allow terrorist financiers, money launderers, and sanctions evaders to launder illicit proceeds through the purchase and consignment of luxury goods.” Treasury has issued warnings on money laundering and terrorist financing risks associated with the trade of works of art in a February 2022 report and an October 2020 art advisory (covered by InfoBytes here and here).
As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. “[A]ny entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. OFAC warned that “persons that engage in certain transactions with the persons designated today may themselves be exposed to sanctions or subject to an enforcement action.” Additionally, “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the targets designated today pursuant to E.O. 13224, as amended, could be subject to U.S. sanctions.”
The action by Treasury was taken in coordination with the Department of Homeland Security, the Department of State’s Rewards for Justice program, and the United Kingdom. The same day, the DOJ unsealed a nine-count indictment charging the Hizballah financier and eight co-defendants with conspiring to evade terrorism-related sanctions. According to the DOJ, despite being sanctioned and prohibited from engaging in transactions with U.S. persons, the Hizballah financier and the other co-defendants used a complex web of business entities to conduct money laundering transactions involving valuable artwork and diamond-grading services.