The latest news from our regional desks about financial crime, corruption, sanctions, and integrity issues worldwide.
This month’s Red Flag Bulletin includes the following stories:
- South African, Ivorian and Congolese individuals sanctioned by the US for alleged involvement in terrorist financing;
- Former Mauritanian President Mohamed Ould Abdel Aziz on trial for his alleged involvement in the corrupt award of state contracts and sale of state assets during his administration; and
- European Parliament passes the first cryptocurrency regulation to prevent fraudulent activity in the bloc.
SUB-SAHARAN AFRICA: US SANCTIONS INDIVIDUALS IN SOUTH AFRICA, CÔTE D’IVOIRE, AND THE DRC FOR INVOLVEMENT IN ALLEGED TERRORIST FINANCING
On 18 April, the US Department of the Treasury’s Office of Foreign Assets Control announced sanctions against 52 individuals and companies in the UK, Côte d’Ivoire, South Africa, the Democratic Republic of Congo, Belgium, Angola, and South Africa. The sanctions were imposed due to suspected ties to Nazem Said Ahmad, a Belgian-Lebanese national who was designated as a terrorist by the US in 2019 for his alleged financing of Hezbollah, a Lebanese Shia Islamist political and militant group. On 18 April, Ahmad was also sanctioned by the UK Office of Financial Sanctions Implementation and all his UK assets were frozen in a coordinated effort with the US to address Hezbollah financing. These individuals are suspected to have laundered funds and evaded US sanctions by facilitating the transaction of over USD 440 million in illicit proceeds, including diamonds and artwork, between 2019 and 2022, on behalf of, or to the benefit of, Ahmad.
MAURITANIA: FORMER PRESIDENT ON TRIAL FOR ALLEGED CORRUPTION AND MONEY LAUNDERING
On 6 April, the corruption trial against Mohamed Ould Abdel Aziz, the former President of Mauritania (2009-2019), began at a court in the capital, Nouakchott. Charges against Aziz include abuse of office, influence peddling, money laundering, and illicit enrichment primarily relating to his alleged involvement in the corrupt award of state contracts and sale of state assets. Aziz is suspected of syphoning off more than USD 72 million in state funds during his presidential tenure. Aziz was charged in January 2023 along with nine former senior government officials, including two former prime ministers, following a 2020 parliamentary investigation into financial dealings during Aziz’s presidency. Aziz has presciently denied wrongdoing and pleaded not guilty. Aziz has also challenged that he is immune to prosecution in Mauritania given a lack of constitutional grounds to charge a former president. The court announced that it will not rule on this challenge until the end of the trial.
US: FROMER PRESIDENT DONALD TRUMP INDICTED IN NEW YORK FOR FALSIFYING BUSINESS RECORDS
On 4 April, former US president Donald Trump was indicted in a New York State Supreme Court for allegedly falsifying business records with the intent to conceal damaging information from voters during his 2016 presidential campaign. Trump was charged with 34 felony counts related to an alleged scheme he orchestrated to identify, purchase, and bury negative information about him. This included an alleged payment made to actress Stormy Daniels to prevent her from disclosing information about her reported affair with Trump. On 24 April, a local Georgia district attorney also said that prosecutors could announce this summer whether charges would be brought against Trump for election interference related to his efforts to overturn his 2020 election loss in Georgia. Trump has maintained his innocence and accused law enforcement and the Democratic party of political persecution and election interference.
MEXICO: US DEPARTMENT OF JUSTICE ANNOUNCES INDICTMENTS AGAINST SINALOA CARTEL LEADERS
On 14 April, the US Department of Justice unsealed five federal indictments against leaders of the Sinaloa Cartel, a Mexico-based transnational drug trafficking organisation, for large-scale drug trafficking, money laundering, and violent crimes. Among those named in the indictments are four of the sons of former Sinaloa Cartel leader Joaquín ‘El Chapo’ Guzmán Loera, who were charged for having taken over the cartel’s leadership following the arrest and extradition of their father. Known collectively as the Chapitos, the four were charged alongside numerous other accomplices with crimes including the obtention, manufacturing and transportation of cocaine, methamphetamine, heroin, and fentanyl trafficking with the intent to import and distribute throughout the US. The charges represent a major enforcement action by the US against one of the largest fentanyl trafficking organisations in the world. The US is also currently considering designating Mexican drug cartels—including the Sinaloa Cartel and Gulf Cartel, among others—as foreign terrorist organisations.
PERU: FORMER PRESIDENT ALEJANDRO TOLEDO EXTRADICTED FROM THE US FOR BRIBERY ACCUSATIONS
On 21 April, Peru’s former president Alejandro Toledo surrendered to American federal authorities in California related to an extradition proceeding filed against him in the US. Toledo is being prosecuted by Peruvian authorities, who are seeking a 20-year prison sentence, for having allegedly received over USD 25 million in bribes from the Brazilian construction conglomerate Odebrecht during his presidential tenure from 2001 to 2006. The bribes were reportedly in exchange for public works contracts. Odebrecht, currently named Novonor, confessed to the US Department of Justice that the group paid almost USD 800 million in bribes to Latin American politicians. Toledo fled to the US after his term in office as president ended in 2006. In 2018, Peruvian authorities issued as extradition request and in 2019, Toledo was arrested by US authorities. Subsequently, in 2020, he was granted bail and ordered to live under house arrest. Toledo is one of the six former Peruvian presidents investigated for bribery schemes. He has denied soliciting or receiving bribes.
EUROPE: EU AGENCY ARRESTS SUSPECTS OF A CRIMINAL NETWORK OPERATING IN EASTERN EUROPE
On 25 April, the European Union Agency for Law Enforcement Cooperation arrested five new suspects in an ongoing investigation into a criminal network suspected of carrying out fraudulent activity via online investment schemes. A two-day cross-border action undertaken by authorities in Germany, Bulgaria, Romania, Georgia, and Israel culminated in searches of five illegal call centres located in Bulgaria and Romania and the seizure of luxury watches, bank cards, bitcoins, and documents. The authorities believe the call centres to be connected to a scheme which, between 2019 and 2021, targeted German investors on social media to solicit investment in fake binary options, operating out of call centres in several European countries. While the alleged fraud was originally thought to have generated losses for investors of at least EUR 15 million, investigators have since identified more than 33,000 victims who report to have lost a total of EUR 89 million.
EUROPE: EU PARLIAMENT PASSES THE FIRST EVER CRYPTOCURRENCY REGULATION
On 20 April, the European Parliament passed significant crypto regulations, adding additional guidelines to prevent fraudulent activity in the bloc. The regulations named Markets in Crypto-Assets (MiCA) regulation and the Transfer of Funds (TFR) regulation will be enforced from July 2024. The new regulations establish the European Union as the first major jurisdiction to introduce comprehensive crypto asset regulation. Once implemented, crypto asset service providers will be required to identify their customers, determine if they hold sufficient reserves for stablecoin issuance, and provide climate footprint data on the crypto that they issue and trade. Meanwhile, the recast of TFR aims to strengthen anti-money laundering measures, requiring tracing of crypto asset transfers and providing authorities with transaction data. Implementation will come in stages to allow the industry time to adjust. Stablecoin regulation is set to come into effect in July 2024 while broader regulations will be enforced from January 2025. The laws bring clarity to the European crypto-asset industry, allowing for regulated services across the bloc.
PAKISTAN: ARREST OF FORMER PAKISTAN PRIME MINISTER’S CLOSE AIDE FOR MONEY LAUNDERING
On 13 April, the Pakistan Federal Investigation Agency arrested Iftikhar Rasool Ghumman, the security chief of the former Pakistan Prime Minister Imran Khan, for his alleged involvement in an international money-laundering scheme. The scheme reportedly involved a network of individuals operating through Hundi and Hawala channels with over 40 shell companies used to transfer billions of rupees overseas. Ghumman was allegedly one of three individuals operating the scheme. Imran Khan referred to the arrest as another attempt by the Pakistan Government to arrest him and bring back the previous PM, Nawaz Sharif, to power. Notably, Imran Khan was ousted in April 2022 through a parliamentary vote of no-confidence. He and his supporters have since faced dozens of charges including abetment of violence, corruption, and terrorism for protesting against Imran Khan’s removal. The legal proceedings against Khan are ongoing.
MACAU: JUNKET OPERATOR CONVICTED FOR ILLEGAL GAMBLING AND OPERATING CRIMINAL SYNDICATES
On 21 April, the Macanese court convicted Levo Chan Weng-lin, the founder of Macau’s second largest junket operator Tak Chun, on 34 charges, including illegal gambling, running criminal syndicates, fraud, and money laundering. The illegal activities reportedly earned Chan’s businesses around MOP 1.5 billion (USD 185 million). The court sentenced Chan to 14 years in prison, and ordered him to pay the Macanese Government and the casinos MOP 773 million (USD 99 million) for the taxation and financial loss caused by his illegal activities. Four of Chan’s business associates were also given prison sentences ranging between 7 to 11 years for similar illegal activities. The crackdown on high-profile junket operators in Macau has been ongoing since 2021, starting from arresting the largest junket operator in the city, Alvin Chow Cheok Wa, the founder of Suncity Group.
RUSSIA AND CIS
UZBEKISTAN: ENERGY DEALINGS WITH RUSSIA HEIGHTEN RISK OF SECONDARY SANCTIONS
On 14 April, Deputy Prime Minister of the Russian Federation Alexander Novak met in Moscow with the Minister of Energy of the Republic of Uzbekistan Zhurabek Mirzamakhmudov to discuss energy cooperation between the two countries. This included the possibility of Rosatom, the Russian state atomic energy corporation, constructing new nuclear power facilities in Uzbekistan. If Uzbekistan agrees to new power plants with the support of Rosatom, the Central Asian country could expose itself to secondary sanctions. Russia currently enriches the most uranium on an annual basis worldwide and remains central to the global nuclear fuel supply chain. In light of this meeting G-7 nations have committed themselves to diversifying the global nuclear fuel market. At the same time, Germany, Poland and other EU nations have been calling for EU sanctions on the Russian nuclear energy sector. However, reported pushback from France and Hungary will likely limit sanctions on Rosatom to measures against its top executives.
MIDDLE EAST AND NORTH AFRICA
UAE: New corporate regulation in the UAE
On 18 April, the Securities and Commodities Authority, the UAE’s federal securities regulator, announced that it would begin to accept license applications for cryptocurrency operations. The state-wide licensing framework builds on existing licensing procedure in Dubai and Abu Dhabi, but is not applicable to entities already licensed in the UAE’s economic free zones. Later on 23 April, the UAE Ministry of Finance announced a change in its tax laws enabling entities providing “public benefit” an exemption on Corporate Tax. Specifically, this applies to entities operating within the religious, charity, science, education and culture sectors. Entities seeking to obtain this relief must register with the UAE Ministry of Finance. If successful in their registration, businesses would avoid taxation on taxable income below AED 375,000 (USD 102,083).