Alert on Sudan Warns of Severe Risks of Money Laundering, Terror Financing
April 2, 2019 (Nyamilepedia) — A new alert released today by The Sentry warns of the severe risks for money laundering, terrorist financing, and other criminal activity in the Sudanese financial system.
The Sentry Alert, “Sudan’s Anti-Corruption Whitewash: The Bashir Regime’s Hollow Commitment to Combating Illicit Finance,” details how the Sudanese government has protected deeply entrenched systemic corruption and continues to flout international anti-corruption standards, including those of the Financial Action Task Force (FATF), the main intergovernmental body charged with regulating and monitoring anti-money laundering and counter-terrorism financing (AML/CFT).
Sudan is now in the 14th week of peaceful mass protests that have spread across the country, demonstrations in which corruption has been a core issue. Violent crackdowns by the Bashir regime have included the torture and killing of peaceful protestors.
John Prendergast, Founding Director of the Enough Project and Co-Founder of The Sentry, said: “Kleptocrats like Bashir use the same money laundering techniques as criminals and terrorists. Sudan’s weak anti-money laundering controls leave the entire country open to abuse by Bashir’s inner circle in Khartoum, but also to exploitation by criminal and terrorist networks operating in the country and region. This report exposes how dangerous the illicit finance situation is now in Sudan, and how the Sudanese government has failed to implement global anti-money laundering standards. The United States should act now with network sanctions targeting those responsible for grand corruption, grave human rights abuses, and threats to global security and the integrity of the international financial system.”
The Sentry Alert’s detailed comparison of the laws and policies in place in Sudan and the recommendations set forth by the FATF shows that the Sudanese government’s efforts to counter money laundering and terrorist financing are vastly inadequate. This inadequacy creates tremendous risk for international financial institutions and businesses operating in Sudan, and the regime’s reluctance to implement sufficient anti-money laundering measures demonstrates an unwillingness to tackle its own rampant corruption.
Joshua White, Director of Policy and Analysis at The Sentry and the Enough Project, said: “Despite receiving relief from U.S. sanctions, the Bashir regime continues to steal from its people and commit widespread human rights abuses. It should be no surprise that the Sudanese government, which itself is the main culprit for widespread corruption, has failed to take serious steps to combat money laundering and terrorist financing. The high-risk nature of doing business in a country where those in charge are notorious for obfuscating illicit financial activity should deter international banks from allowing their institutions to be exploited by criminal and terrorist networks.”
As revealed in previous reports by The Sentry and its strategic partner the Enough Project, Sudan’s governing institutions have been coopted by a corrupt inner circle that has maintained power by unleashing a brutal and repressive security apparatus on the Sudanese people.
Dr. Suliman Baldo, Senior Advisor to the Enough Project, said: “The massive corruption of the regime of President Bashir has driven the nation’s economy to near collapse. Rather than killing and torturing citizens who rise up peacefully and call for end to corruption and repression, the Bashir regime should take accountability for its own economic mismanagement and system-wide criminality.”
The Sentry alert proposes three sets of critical recommendations to the Sudanese government, to the U.S. government, and to U.S. banks:
RECOMMENDATIONS TO THE GOVERNMENT OF SUDAN
- Terrorism and North Korea: Cease all support for terror and extremist groups, including permitting fundraising activities. Cease military deals with North Korea. Open source evidence of support to terrorist and extremist groups and arms deals with North Korea has decreased over the years, but concerns remain that this activity continues covertly. The Sudanese government needs to take the enforcement of international sanctions seriously and work to fully implement UNSCRs 1267 and 1373. Effective implementation of these UNSCRs is a FATF recommendation, and Sudan’s inability to enforce these sanctions poses a significant risk to financial institutions and businesses operating in the country.
- Corruption: Implement a strong and independent anti-corruption commission with independence from the executive branch and the mandate to initiate financial investigations and refer cases to an independent judiciary. With the Bashir regime in power, any anti-corruption effort will be difficult to execute but is necessary to build a robust and functional AML/CFT regime. An effective anti-corruption commission needs to be led by individuals outside of Bashir’s network and the security apparatus and should be adequately funded to ensure success.
- Financial Intelligence Unit (FIU) and Law Enforcement: The government should work to strengthen the FIU and other law enforcement bodies with the appropriate resources and independence to fulfill their mission. The FIU should be empowered to take cases to the prosecutors, and the capacity of the judiciary should be expanded so that cases may be brought from the FIU and tried in the court system.
- Banking Supervision: The legal framework for banking supervision is mostly compliant with FATF recommendations, but the next mutual evaluation, scheduled for 2022, will focus on the implementation of that legal framework. The relevant organizations need to be fully staffed, fully funded, and politically supported to implement AML/CFT laws and policies. One particular area of concern is banking supervision and the independence and integrity of the banking system. With the recent lifting of sanctions and the possibility of Sudan’s removal from the SST list, an influx of investment and capital could lead to the abuse of the banking system by nefarious actors. For banks operating in Sudan, the Ministry of Finance should issue specific guidance on illicit financial activities affecting Sudan, such as corruption, terror financing, and politically exposed persons (PEPs). Additionally, the Sudanese government should encourage banks to submit suspicious activity reports (SARs) to the FIU.
RECOMMENDATIONS TO THE U.S. GOVERNMENT
- Sanctions: The United States should impose sanctions on individuals responsible for corruption and human rights abuse in Sudan, pursuant to its Global Magnitsky sanctions authority. In light of the serious levels of corruption described in previous Enough Project reports and the Sudan government’s responsibility for past and ongoing human rights abuses the U.S. administration should identify and sanction responsible individuals in the regime as well as the corrupt networks to which they belong. These individuals and networks are not only responsible for atrocities, but their corrupt activities are a major cause of the economic crisis that followed the lifting of comprehensive U.S. sanctions in 2017.
- Risk Advisory: FinCEN should issue an advisory warning about the risk of doing business with Sudan, a country that does not have adequate AML implementation, has been rife with corruption, and as documented in a November 2018 Enough Project report, has historically had terror finance connections. The advisory can be similar to the 2018 Nicaragua advisory on corruption, where FinCEN identified human rights abuses in the country, the nature of government corruption, possible money laundering and asset flight typologies for banks to watch for, and country-specific SAR-filing instructions.
RECOMMENDATIONS TO U.S. BANKS
- Enhanced Due Diligence: U.S. banks maintaining correspondent relationships with Sudanese banks should apply enhanced due diligence to these relationships, ensuring that their counterparts are following FATF recommendations, are monitoring for terrorist financing, and are not laundering money from corruption.
ABOUT THE SENTRY
The Sentry is an investigative team co-founded by George Clooney and John Prendergast that follows the dirty money and builds cases focusing on the war criminals most responsible for Africa’s deadliest conflicts and the corrupt transnational networks that profit from them. The Sentry’s team is composed of financial forensic investigators, international human rights lawyers, regional experts, and former law enforcement agents, intelligence officers, policymakers, investigative journalists, and banking professionals.
The Sentry currently focuses its work on South Sudan, Sudan, the Democratic Republic of Congo, and the Central African Republic. The Sentry aims to create significant financial consequences for kleptocrats, war criminals, and their international collaborators through network sanctions, anti-money laundering measures, prosecutions, compliance action by banks, and other tools of financial pressure. These measures aim to disrupt the profit incentives for mass atrocities and oppression, and create new leverage in support of peace and human rights. The Sentry and its partner the Enough Project undertake high-level advocacy with policymakers around the world as well as wide-reaching education campaigns by mobilizing students, faith-based groups, celebrities, and others.
Since its launch in 2016, The Sentry has created hard-hitting reports and converted extensive investigative research into a large volume of dossiers on individuals and entities connected to grand corruption, violence, or serious human rights abuses. The investigative team has turned those dossiers over to government regulatory and law enforcement agencies in the U.S. and around the world, as well as to officials at the world’s largest banks through which so much of the dirty money flows.
Learn more at www.TheSentry.org.