Bruce Zagaris, Author at IELR Blog

Matthew D. Lee Updates Foreign Account Tax Compliance Act Answer Book for 2019

September 30, 2019 by Bruce Zagaris Leave a Comment

This new edition of the Foreign Tax Account Compliance Act Answer Book, which was first published in 2015 by Practising Law Institute, addresses recent changes to FATCA regulations relating to compliance and verification procedures for a variety of entities, including sponsoring entities of foreign financial institutions; non-financial foreign entities; trustees of trustee-documented trusts; registered deemed-compliant FFIs; and financial institutions that implement consolidated compliance programs.

The update examines revisions to the responsible officer compliance certification process and the FATCA registration and renewal process. It also describes recent offshore tax evasion criminal and civil enforcement efforts undertaken by the Internal Revenue Service and the Justice Department and how those efforts impact FATCA compliance by foreign financial institutions as well as U.S. taxpayers.

We are pleased to offer a 20 percent discount on the 2019 edition.

For more information, please contact Matt at mlee@foxrothschild.com or visit the PLI website.

8 Senators Introduce ILLICIT CASH Act to Improve Corporate Transparency and International Aspects of AML and CFT

September 27, 2019 by Bruce Zagaris Leave a Comment

On September 26, 2019, Senate Banking Committee members, U.S. Sens. Mark R. Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL), Mike Rounds (R-SD), Bob Menendez (D-NJ), and John Kennedy (R-LA), Catherine Cortez Masto (D-NV), and Jerry Moran (R-KS) today introduced bipartisan legislation to improve corporate transparency, strengthen national security, and help law enforcement combat illicit financial activity being carried out by terrorists, drug and human traffickers, and other criminals.

This post highlights the major provisions in the bill and then the international provisions.

The Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act (S.2563) would, for the first time, require shell companies to disclose their true owners to the U.S. Department of Treasury. It would also update decades-old anti-money laundering (AML) and combating the financing of terrorism (CFT) policies. The bill provides Treasury and law enforcement new tools they need to fight criminal networks. This includes improving overall communication between law enforcement, financial institutions, and regulators, and facilitating the adoption of critical 21st century technologies.

Salient Provisions

Specifically, this legislation would:

Establish federal reporting requirements mandating that all beneficial ownership information be maintained in a comprehensive federal database, with strict privacy protections, accessible by federal and local law enforcement. (Sec. 401) and expand FinCEN geographic targeting order authority to commercial real estate (Sec. 402).

Help recruit and retain top talent at the Financial Crimes Enforcement Network (FinCEN) by putting employees on a pay scale comparable to that of federal financial regulators. (Sec. 102)

Create a hub of financial expert investigators at FinCEN to investigate potential AML-CFT activity in collaboration with federal government agencies. (Sec. 103).

Facilitate communications between the Treasury and financial institutions by establishing a Treasury financial institution liaison to seek and receive comments regarding AML-CFT rules, regulations, and examinations. (Sec. 104)

Require the Department of Justice (DOJ) to provide the Treasury Department with metrics on the usefulness of AML-CFT data from financial institutions for law enforcement purposes, as well as data on the past and current trends identified by DOJ in the AML-CFT landscape. (Sec. 201)

Require law enforcement to coordinate with financial regulators to provide periodic feedback to financial institutions on their suspicious activity reports. (Sec. 202)

Prioritize the protection of personally identifying information while establishing a clear path for financial institutions to share AML-CFT information for the purposes of identifying suspicious activity. (Sec. 303)

Ensure the inclusion of current and future payment systems in the AML-CFT regime by updating the definition of “coins and currency” to include digital currency. (Sec. 308)

International Provisions

Some of the provisions are designed to strengthen the international aspects of AML/CFT laws:

Prevent foreign banks from obstructing money laundering or terrorist financing investigations by requiring these banks to produce records in a manner that establishes their authenticity and reliability for evidentiary purposes, and compelling them to comply with subpoenas. This legislation would also authorize contempt sanctions for banks that fail to comply and increase penalties on repeat BSA violators. (Sec. 306);

Start a pilot program for information sharing between a financial institution and its foreign branches and affiliates that are located in OECD jurisdictions (Sec. 305).

Require the Treasury to work with foreign counterparts, including through the Financial Action Task Force, the International Monetary Fund, the World Bank, and the United Nations, to promote stronger AML frameworks and enforcement of AML laws.

Require the Treasury Department to carry out a study on the extent and effect of illicit finance risk relating to the Government of the People’s Republic of China and to develop a strategy to combat money laundering through Chinese firms.

Require the Treasury Department to conduct a study and submit to Congress a report that considers how authoritarian regimes in foreign countries and their proxies use the financial system of the U.S. and to conduct political influence operations, sustain kleptocratic regimes, export corruption, and otherwise undermine democratic governance in the U.S.

A section-by-section analysis of this bill is available here. A one-pager is available here.

A press release from Senator Warner’s office is available.

Federal Judge Overturns Rafiekian’s Conviction and DOJ Ends Investigations of Podesta and Van Weber, Causing a Blow to FARA Enforcement Efforts

September 25, 2019 by Bruce Zagaris Leave a Comment

On September 24, 2019, Judge Anthony J. Trenga of the U.S. District Court Eastern District of Virginia issued a 39-page opinion, overturning the conviction of Bijan Rafiekian, the former business partner of Michael Flynn, the first national security adviser of United States President Donald J. Trump. On September 23, the United States Department of Justice notified Tony Podesta, a Democratic power broker, and Vin Weber, a Republican former congressman, of the closing of its investigation for violations of the Foreign Agents Registration Act.

Rafiekian Opinion

On July 23, 2019, after a six-day jury trial, Rafiekian was convicted for conspiracy under 18 U.S.C. § 371 and acting in the United States as an unregistered agent of a foreign government, namely the government of Turkey, in violation of 18 U.S.C. § 951.

On September 12, 2019, the Court held a hearing on Rafiekian’s Motion for Judgment of Acquittal Under Federal Rule of Criminal Procedure 29 and Motion for a New Trial.

Judge Trenga granted the Motions for Acquittal and conditionally granted the Motion for New Trial.

With respect to the conviction for acting as an unregistered agent of Turkey, Judge Trenga found there is no substantial evidence that Rafiekian agreed to operate subject to the direction or control of the Turkish government. Additionally, Judge Trenga found no evidence of any actual or implied agreement between Rafiekian and the government of Turkey or any official of the government of Turkey.

A contract existed between the Flynn Intel Group (“FIG”) and Alptekin, a Turkish businessman who is the owner of Inovo, BV, a Dutch company located in the Netherlands. Alptekin was previously the Chairman of the Turkish-American Business Council.

On September 8, 2016, Flynn, on behalf of FIG, and Alptekin, on behalf of Invovo, entered into a written agreement, titled “the Independent Advisory Services Agreement.”

The work was to focus on Fethullah Gulen, including his ideology, influence, and relationships with American political leaders. The government of Turkey had tried unsuccessfully to persuade the U.S. government to extradite Gulen.

On September 19, 2016, Alptekin arranged a meeting in which Rafiekian, Flynn and others participated. Also participating was then-Turkish Minister of Energy and Natural Resources Berat Albayrak, President Erdogan’s son-in-law. The meeting mostly consisted of the Turkish officials expressing their negative opinions concerning Gulen.

On November 2, 2016, Rafiekian prepared an op-ed to be published under Flynn’s name. On November 6, 2017, Flynn returned the op-ed to Rafiekian “with substantive changes.” The op-ed was published under Flynn’s name in The Hill newspaper. It was entitled Our Ally Turkey Is In Crisis and Needs Our Support.

Following the publication of the op-ed, the FARA Registration Unit of DOJ sent Flynn a letter, asking about the op-ed and FIG’s relationship with Alptekin and Inovo, so it could determine whether FIG, Flynn, or anyone else should file a registration statement under FARA. After Covington, the lawyers for FIG, conducted an investigation, Covington ultimately decided to file a complete FARA registration statement . The statements listed Inovo, and not the government of Turkey, as the foreign principal.

On December 1, 2017, Flynn pled guilty in a separate case to unrelated charges. He agreed to cooperate with the government.

Section 951 Conviction

Judge Trenga’s opinion observed that mothering about the structure of GIG’s contracts with Inovo and Alptekin or the payments made pursuant to those contracts gives rise to a reasonable or rational inference that Rafiekian had acted or agreed to act as an agent of the Turkish government. The evidence at trial was insufficient to conclude that Rafiekian had agreed or act subject to Turkey’s director or control. The opinion reasons that no evidence exists that the Turkish government required the op-ed, either directly or through Alptekin.

Conspiracy Conviction

The opinion finds insufficient evidence to convict Rafiekian of conspiracy to (1) act as an unregistered agent of a foreign government in violation of Sec. 951; and (2) make willful and material false statements and omissions in a FARA filing in violation of 22 U.S.C. § 618(a)(2). The opinion underscored Rafiekian’s efforts to comply with any registration or notification requirements, including his consultations with two law firms concerning FIG’s registration obligations, FIG’s filing under the Lobbying Disclosure Act on the advice of a lawyer, and his voluntary disclosure to U.S. authorities on September 28, 2016 concerning the FIG engagement arranged through Alptekin “as a business contact” who had “senior level contracts in the Turkish government.”

Notice of Closing the Investigation of Podesta and Weber

The decision to end the investigation of Podesta and Weber followed weeks after a federal jury found former White House counsel Gregory B. Craig not guilty of lying to the DOJ about his media contacts concerning his Ukrainian work. The investigation of Podesta and Weber grew out of the investigation of Manafort and Craig. The Podesta Group and Mercury, for whom Vin Weber worked, reported on their FARA filing that they had represented the European Center for Modern Ukraine, a Brussels-based nonprofit group. Prosecutors alleged the real client was the government of Ukraine.

The current issue of the IELR will discuss in more detail the implications of the Rafiekian acquittal and the close of the investigations against Podesta and Weber.

U.S.-El Salvador Sign Agreement to Force Asylum Seekers to El Salvador

September 23, 2019 by Bruce Zagaris Leave a Comment

On September 20, 2019, the United States and El Salvador governments signed a Protection Cooperative Agreement. The Acting Secretary of the U.S. Department of Homeland Security, Kevin K. McAleenan signed on behalf of the United States. The Minister of Foreign Affairs, Alexandra Hill Tinoco signed on behalf of El Salvador.

According to a joint statement, the Agreement recognizes El Salvador’s recent decision to join the Comprehensive Refugee Response Framework. It states it will use U.S. and international best practices to “enhance collaboration on building protection capacity and increase protection options closer to home for vulnerable populations.”

The two governments commit to responding to “the issue of irregular migration in a joint and humane way that will contribute to greater prosperity and security of the region.” The Agreement shows the partnership between both governments “to discourage dangerous irregular migration across Central America toward the U.S. and to combat transnational criminal organizations, strengthen border security, and reduce human trafficking and smuggling.”

Once the Agreement becomes effective, it will further expand the capacity of protection systems in the region. The joint statement does not state when the agreement will take effect and what will be required. The U.S. and Guatemala signed a similar agreement in July in the waning days of the Jimmy Morales Administration. However, the Guatemala Constitutional Court ruled that the Parliament must approved the policy before it takes effect.

The Cooperative Agreement follows the Letter of Intent signed by Acting Secretary McAleenan with the Government of El Salvador last month in San Salvador to intensify bilateral cooperation in key areas.

A leading journal in El Salvador observes that the country with the most asylum applicants in 2018 has now agreed to accept asylum applicants that Trump rejects.

The joint statement expresses that “(i)n recent months, Acting Secretary McAleenan has also forged partnerships with Mexico, Guatemala, El Salvador, Honduras and Panama to disrupt human and drug smuggling operations and address the crisis at the U.S.-Mexico border.”

While the agreement aligns with the administration’s “third country” asylum rule, that term was not used in the press conference between the two signatories announcing the agreement.

The obligation for asylees to look for refuge in the countries from which they flee contradicts what travel warnings of the U.S. Department of State. As of January 28, 2019, the State Department issued a travel advisory with respect to El Salvador, advising:

“Reconsider travel to El Salvador due to crime…Violent crime, such as murder, assault, rape, and armed robbery, is common. Gang activity, such as extortion, violent street crime, and narcotics and arms trafficking, is widespread. Local police may lack the resources to respond effectively to serious criminal incidents.”

Various international human rights organizations observe that a country with the sixth highest number of persons seeking asylum in 2018 does not meet the conditions to protect asylees in its territory.

Charanya Krishnaswami, the advocacy director for the Americas at Amnesty International USA, criticized the agreement, stating: “This agreement makes a mockery of the right to asylum. People should not be forced to seek safety in countries where they will not be safe. She continued that “El Salvador has one of the highest rates of violence in the world, including gender-based violence so rampant that Amnesty International declared it one of the most dangerous countries in the world to be a woman. It is not safe for its own citizens, much less for asylum-seekers.”

The October issue of the IELR will have additional information on the agreement and the El Salvador initiative to strengthen patrolling of its borders, which the United States government is partially financing.

U.S. Director of INTERPOL NCB Remarks Help Celebrate USNCB’s 50th Anniversary

September 20, 2019 by Bruce Zagaris Leave a Comment

On September 17, 2019, Wayne H. Salzgaber, Director of the United States National Central Bureau (USNCB) of INTERPOL gave remarks, highlighting some of its unique achievements.

A unique aspect of the USNCB has been that it co-managed by the Deputy Attorney General and the Deputy Secretary of the U.S. Department of Homeland Security (DHS – formally Treasury). The co-management structure enables to USNCB to marshal the resources necessary to handle whatever international challenge occurs.

Salzgaber pointed as a reason to the USNCB’s success as its partner agencies in the U.S. United States partners detail their subject matter experts to the USNCB, helping the USNCB deliver the support required to all 18,000 U.S. law enforcement agencies across the United States.

An example of the contribution of the USNCB to INTERPOL is the development and operation of INTERPOL’s Maritime Piracy database out of the USNCB before the latter gate it to INTERPOL as a means of bringing in more international partners. Nearly a decade later, that database is still being utilized to combat maritime piracy and prosecute persons involved in maritime piracy. (see https://www.interpol.int/Crimes/Maritime-crime)

USNCB personnel and detailees with expertise in traveler screening and passport data, collaborated with a handful of member country representatives to develop INTERPOL’s Stolen and Lost Travel Document database. The database now has more than 90 million records of stolen or lost travel documents reported by more than 160 countries and is used virtually every second of every day to screen international travelers across the globe.

Since 9/11, USNCB has developed and used multiple Counter Terrorism Information sharing programs with its law enforcement and Department of defense partners. Operations such Vennlig,[1] Hamah, Tread, and Cellblock.

According to Salzgaber, INTERPOL has adopted the USNCB’s model under a program called “MILEX” or Military to Law Enforcement Exchange. Today, a number of U.S.> foreign partners are using MILEX to collect and disseminate foreign terrorist fighter identity data obtained from conflict zones across the globe.

Salzgaber said of the more impactful programs USNCB developed was the integration of the INTERPOL notice system with U.S. national law enforcement indices. The solution enables any border official or law enforcement officer to access INTERPOL’s global advisories on missing or wanted persons, foreign terrorist fighters and other subjects of interest within minutes of their publication right on their agency’s native law enforcement or border systems.

However, on September 12, the Helsinki Commission held a hearing on the abuse of the INTERPOL Red Notice and diffusion systems, whereby many autocratic countries use the system to prevent political exiles from traveling and they try to arrest them. The following day members of the Helsinki Commission introduced a bill to remedy the abuses.

Salzgaber said the success of the USNCBI solution has resulted in the USNCB and now INTERPOL deploying technical assistance teams to help other countries in integrating their immigration and border security systems with INTERPOL’s system, thereby creating truly global security architecture.

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[1] Project Vennlig successfully provides terrorist information among INTERPOL member countries and the U.S. law enforcement community. See INTERPOL USNBC, U.S. Department of Justice, FY 2010 Performance Budget, Congressional Submission, 2. Sept. 18, 2013 https://www.justice.gov › legacy › 2013/09/28 › fy10-usncb-justification.

Bill to Curb INTERPOL Abuse Follows Helsinki Commission Hearing

September 12, 2019 by Bruce Zagaris Leave a Comment

Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20) and Ranking Member Rep. Joe Wilson (SC-02) today introduced the Transnational Repression Accountability and Prevention (TRAP) Act in the House of Representatives. Helsinki Commission Co-Chairman Sen. Roger Wicker (MS) and Ranking Member Sen. Ben Cardin (MD) plan to introduce the TRAP Act in the Senate on Monday.

On September 12, 2019, the Commission on Security and Cooperation in Europe (CSCE), also known as the Helsinki Commission, convened a hearing on the Tools of Transnational Repression: How Autocrats Punish Dissent Overseas, focusing on the role of International Criminal Police Organization (INTERPOL).

Background

The Commission issued an explanation for the hearing, state that, as modern technology permits political dissidents and human rights defenders to operate from almost anywhere on the planet, repressive regimes have increasingly tried to intimidate them. .

To silence dissent from abroad, autocrats often turn to INTERPOL to file bogus criminal claims seeking the arrest and extradition of their political targets. This abuse of INTERPOL Red Notices and Diffusions enables autocratic governments to harass and intimidate their opponents thousands of miles away, even within free and democratic societies.

The U.S. Helsinki Commission convened an expert panel to highlight how present-day autocrats use INTERPOL and other means such as surveillance, abduction, and assassination to punish dissent overseas. The witnesses suggested how the United States and other democratic nations can defend against these threats to the rule of law domestically and internationally.

Opening Remarks

Sen. Roger Wicker (R-Ms) chaired the hearing. He is the chair of the Commission and Vice-President of the OSCE Parliamentary Assembly. He said INTERPOL can be manipulated by autocratic governments. He said Red Notices and diffusions are constantly abused. INTERPOL regularly receives requests for human rights defenders and journalists on trumped up charges, such as the Kremlin’s efforts to go after Bill Browder. Russia has issued at least eight diffusions about Browder over a decade. INTERPOL has not punished Russia. In fact, last fall Russia proposed a candidate for Secretary General.

Before the hearing, the Commission received statements about persons targeted by Tajikistan, Uzbekistan, Turkey, and other governments.

Sen. Wicker will introduce legislation on limiting the use in U.S. immigration and law enforcement of INTERPOL notices and requiring the State Department to report on trends and transnational repression in its annual Human Rights report.

According to Sen. Wicker, INTERPOL is in need of greater transparency. The matter has been brought to the attention of the CSCE Parliamentary Assembly at its last meeting. The hearing will bring policy recommendations.

Senator Ben Cardin (D-Md.), a member of the Commission, commended Sen. Wicker’s role and said he looks forward to working with Mr. Wicker on his legislation. Sen. Cardin noted that the Magnitsky statute has been expanded. He lamented that the Magnitsky Act has not been sufficiently used against Saudi Arabia for the murder of the late Saudi journalist Jamal Khashogghi.

Rep. Joe Wilson (R-SC) and Sen. Sheldon Whitehouse (D-RI) also explained they supported the work of the hearing.

Testimony

The following witnesses testified:

Alexander Cooley, Director, Columbia University’s Harriman Institute for the Study of Russia, Eurasia, and Eastern Europe; Claire Tow Professor of Political Science, Barnard College, testified about harassment of political exiles and the denial to them of due process. The rise of technology enables autocratic governments to intimidate political exiles more than ever. Autocrats are networking to try to repurpose international organizations to meet their goals. INTERPOL diffusion notices are mushrooming. Azerbaijan, Venezuela, India, and Tajikistan are among the governments that abuse the diffusions. The diffusion notices make it difficult for targets to travel and use bank accounts and it costs them significant legal fees to extricate themselves from the problems arising out of the diffusion notices. The proposed Transnational Repression Accountability Procedures (TRAP) Act will help combat some of these dangers. Cooley said the TRAP Act would send a powerful signal about the importance of maintaining clear international standards against the politicization of our most important international organizations.

Nate Schenkkan, Director for Special Research, Freedom House, discussed the global campaign by Turkey after the 2016 attempted coup. It uploaded tens of thousands of diffusion notices, kidnapped 104 of its nationals from other countries (at least one was the wrong person although that person is still in jail), and cancelled thousands of passports. The U.S. should support exiled political exiles and journalists, including diaspora in the U.S. Schenkkan also endorsed

Freedom House will publish a new study, documenting the transnational oppression and violence against political exiles.

Bruno Min, Senior Legal and Policy Advisor, Fair Trials (FT), testified that INTERPOL is not subject to oversight and hence the U.S. government’s role is very important. A major issue is how INTERPOL reviews Red Notices. We do not know how many Red Notices and diffusions are rejected and do not know what it would take to have INTERPOL review the requests more carefully. We see many abuses against refugees with high public profiles. INTERPOL only has a staff of about 30-40 persons to review 10,000 Red Notices and 50,000 diffusions each year. Diffusions are not subject to the same scrutiny. Hence, there is the risk that unchecked data will enter into national databases.

There is concern about procedures of the Commission for the Control of INTERPOL files (CCF). INTERPOL has improved it and made it more independent. FT has concerns about interpretation of INTERPOL’s rules with respect to international human rights. INTERPOL has taken steps to protect persons who have been accorded refugee status. However, INTERPOL needs to do more.

INTERPOL needs encouragement to implement the recent reforms and adopt more reforms.

A crucial issue is lack of funding and understaffing of INTERPOL, which makes them depend on member countries to do its work at the risk of compromising its independence.

Sandra A. Grossman, Partner, Grossman Young & Hammond, Immigration Law, LLC, testified how autocratic governments are using the U.S. immigration system to abuse exiles. U.S. Immigration and Customs Enforcement (ICE) uses Red Notice to detain people. ICE treaties many Red Notices as conclusive evidence of criminality. ICE and immigration judges use Red Notices to mistreat people. ICE and immigration judges often become tools of corrupt governments, often detaining asylum applications. Jurisprudence and reports by CCF must be published so that more transparency exists about CCF.

Question and Answer

To Sen. Wicker’s inquiry, Grossman said the U.S. contributed $19.4 million and Japan, China, and Europe followed. The U.S. government is by far the greatest contributor.

At the end of the hearing, Sen. Wicker expressed hope that he and the U.S. Congress can do something about some of the abuses both in the U.S. law enforcement system and INTERPOL itself.

TRAP Act

Following reports that U.S. immigration authorities have cited such politically-motivated INTERPOL Red Notices and diffusions to detain some individuals and consider removing them from the United States, the TRAP Act formally codifies strict limitations on how INTERPOL requests can be used by U.S. authorities.

The TRAP Act further declares that it is the policy of the United States to pursue specific reforms within INTERPOL and use its diplomatic clout internationally to protect the rights of victims and denounce abusers. The bill requires the Departments of Justice, Homeland Security, and State, in consultation with other relevant agencies, to provide Congress with an assessment of autocratic abuse of INTERPOL, what the United States is doing to counteract it, and how to adapt United States policy to this evolving autocratic practice. The State Department would also be required to publicly report on the abuse of INTERPOL in its annual Country Reports on Human Rights to create a transparent, public record of these violations of the rule of law.

Original co-sponsors of the legislation include Helsinki Commission members Sen. Marco Rubio (FL), Sen. Cory Gardner (CO), Sen. Sheldon Whitehouse (RI), Rep. Steve Cohen (TN-09), Rep. Brian Fitzpatrick (PA-01), Rep. Richard Hudson (NC-08), Rep. Gwen Moore (WI-04), and Rep. Marc Veasey (TX-33). Rep. John Curtis (UT-03), Rep. Sheila Jackson Lee (TX-18), and Rep. Tom Malinowski (NJ-07) are also original co-sponsors.

Updated Executive Order Provides Enhanced Counterterrorism Sanctions and Targets Foreign Financial Institutions

September 11, 2019 by Bruce Zagaris Leave a Comment

On September 10, 2019, President Donald Trump issued a revised Executive Order 13224, furnishing the Treasury and State Departments new mechanisms permitting the U.S. Government to better identify and designate perpetrators of terrorism worldwide, especially ones involved in terrorism financing. Also on September 10, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) used the new authorities in E.O. 13324 to designate a series of terrorist leaders, facilitators, and entities.

Treasury designated 15 leaders, individuals, and entities affiliated with terrorist groups. The action targets entities affiliated with HAMAS, the Islamic State of Iraq and Syria (ISIS), al-Qa’ida, and the Islamic Revolutionary Guard Corps-Qods-Force (IRGC-QF), and combined with actions taken by the State Department amounts to some of the furthest reaching designations of terrorists and their supporters in the past 15 years.

The President’s revised E.O. and Treasury’s announcement of new designations came just one day before the eighteenth anniversary of 9/11 attacks that occurred on September 11, 2001. The purpose of the original E.O. 13224 was to disrupt the financial infrastructure of terrorist groups worldwide. Treasury’s press release states that E.O. 13224 has helped to dismantle networks supporting a broad range of terrorist groups from al-Qa’ida and ISIS to Iranian-backed groups like Hizballah and HAMAS. The E.O. also is an important mechanism in the U.S. Government’s efforts to drain the financial resources of the Iranian regime’s bad actors including the IRGC, and its foreign expeditionary arm, the Qods Force (IRGC-QF).

Revised E.O. 13324 and New CounterTerrorism Tools

The revised E.O. 13224 gives the Treasury and State Departments new tools that permit the U.S. Government to better identify and designate terrorist perpetrators worldwide. In particular, the E.O.:

Has new designation criteria that permits the U.S. Government to more efficiently target leaders or officials of terrorists groups as well as individuals who participate in terrorist training;
Provides for secondary sanctions against foreign financial institutions that have knowingly conducted or facilitated significant financial transactions on behalf of any person sanctioned pursuant to E.O. 13224;
Authorizes Treasury to prohibit a foreign financial institution that has knowingly conducted or facilitated a significant transaction with any Specially Designated Global Terrorist (SDGT) from opening or maintaining a correspondent or payable-through account in the United States; and
Consolidates U.S. counterterrorism authorities under a single sanctions program by eliminating E.O. 12497 and combining that authority’s goal of defending the Middle East Peace Process with E.O. 13224’s global remit and expanded authorities.
The new authority warns foreign financial institutions that enabling terrorists and their financial backers to rely upon the international financial system to facilitate their malign activities will have consequences.

New Targets of Treasury’s Sanctions under E.O. 13224

Treasury has sanctioned a broad away of persons. Among them is the Turkish-based Redin Exchange for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to, HAMAS. As of March 2019, the Redin Exchange and Treasury-designated financial facilitator Muhammad Sarur as having been involved in a $10 million dollar transfer to HAMAS’s operational arm, the Izz-Al-Din Al-Qassam Brigades. As of mid-2018, Redin Exchange was identified as a key part of the infrastructure used to transfer money to HAMAS. Throughout 2017, tens of millions of dollars was transferred to HAMAS with the assistance of Redin Exchange.

Treasury sanctioned Marwan Mahdi Salah Al-Rawi as Redin Exchange’s Chief Executive Officer, and Ismael Tash, as its Redin Exchange’s Deputy CEO and in charge of its foreign relations.

Treasury sanctioned Lebanon-based Muhammad Sa’id Izadi as a leader or official of the IRGC-QF who has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, HAMAS.

The Turkey-based Zaher Jabarin was sanctioned as the head of HAMAS’s Finance Office. He allegedly manages HAMAS’s yearly budget amounting to tens of millions of dollars, is in charge of HAMAS’s income from around the world, and seeks to obtain add additional sources of funding for HAMAS.

Treasury has sanctioned SMART Ithalat Ihracat Dis Ticaret Limited Sirketi. Ismael Tash is also newly sanctioned. He is the owner of SMART, which is an import/export company and possible front company associated with Redin. Both SMART and Redin Exchange share the same Istanbul –based address.

Saksouk Company for Exchange and Money Transfer (Saksouk) was sanctioned for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, ISIS. In late 2018, Saksouk handled fund transfers on behalf of Syria-based ISIS members.

Treasury has sanctioned Mohamed Ahmed Elsayed Ahmed Ibrahim, a Brazil-based member of al-Qa’ida, who provided facilitation support to al-Qa’ida members and material support to al-Qa’ida.

Treasury has sanctioned Almaida Marani Salvin for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, ISIS-Philippines. In April 2019, Philippine authorities arrested Salvin in Zamboanga City, Philippines, based on her being suspected of unlawful manufacture, sale, acquisition, disposition, importation, or possession of an explosive or incendiary device.

Maldives-based Mohamad Ameen was sanctioned for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, ISIS-Khorasan (ISIS-K). He is allegedly an ISIS-K recruiter who encouraged people to join ISIS-Khorasan.

Treasury has sanctioned Al-Hebo Jewelry Company for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to ISIS. As of late 2017, al-Hebo’s location in Gaziantep, Turkey allegedly participated in an ISIS scheme to convert gold into cash to more efficiently and secretly send funds via hawalas in Turkey to ISIS sleeper cells in Iraq and Syria.

Analysis

A significant new tool in the revised E.O. 13224 is the provision of secondary sanctions against foreign financial institutions that have knowingly conducted or facilitated significant financial transactions on behalf of any person sanctioned pursuant to E.O. 13224. Treasury will be able to force people to choose between using foreign financial institutions under the threat of the secondary sanctions. The ability of Treasury to prohibit a foreign financial institution that has knowingly conducted or facilitated a significant transaction with any Specially Designated Global Terrorist (SDGT) from opening or maintaining a correspondent or payable-through account in the U.S. is also an important sanction.

The new persons sanctioned show the diversity of types of occupations sanctions (e.g., recruiters, financial institutions, jewelers, import-export businesses, CEOs and Deputy-CEOs of financial institutions).

The persons are located worldwide (e.g., Turkey, Lebanon, Maldives, Brazil, Syria, and the Philippines).

The current issue of the IELR will have a more comprehensive discussion of the revised E.O. and the new sanctions.

Denver Cooperates with Kenyan Sister City to Return Long-Lost Artifacts

September 6, 2019 by Bruce Zagaris Leave a Comment

By Miranda Bannister

On July 3, 2019, a collection of Kenyan vigango that resided for decades at the Denver Museum of Nature and Science reached its final stop in a long journey home. The process of returning the vigango to their original Mijikendan community began in 2008 when the Denver museum contacted the Kenyan government, suspecting the collection’s questionable provenance. In doing so, the Denver museum joined the ranks of several American institutions that are going beyond what is demanded of them by international guidelines, state, and federal laws to handle their existing collections ethically.

In 2008, the Denver Museum of Nature and Science became suspicious about the provenance of the vigango, donated in 1990 by actor Gene Hackman and film producer Art Linson. Subsequently, it contacted the Kenyan government to initiate conversations about the return of the objects, which function as sacred memorials to the elders in the Mijikenda community of Kenya. The Denver museum relied upon the Sister Cities Program and the Denver city government to negotiate the return of the objects with Alex Ole Magelo, the Nairobi City County Assembly Speaker. Following five years of negotiations, the parties reached an agreement to transfer the artifacts to the National Museums of Kenya for temporary safekeeping before their ultimate return to the Mijikenda.
However, the Denver museum faced an unforeseen roadblock in 2014 when the vigango entered Kenya. The museum encountered an unexpected tariff of roughly 47,000 USD at Jomo Kenyatta International Airport in Kenya. As a result, the pieces were sitting in storage at the airport for the past five years, until this July. California State University, Fullerton encountered the same challenge in 2014, though its vigango have also reached their destination since then.

The Legal Status of the Vigango

While the vigango finally found their way home, no laws compelled the Denver museum to return the objects. Chip Colwell-Chanthaphonh, curator of anthropology at the museum, explained, “There is no legal instrument or international treaty that requires us to return them. This is not about the law; it’s about ethics.”

A debate still rages over the legal status of the objects, as many of the vigango were “sold” by individuals in the Mijikenda community who had questionable rights to the objects. Other pieces were looted. However, the Denver museum argues that vigango are the communal property of the Mijikenda community. Therefore, no Mijikenda individual has the legal right to sell them. Colwell-Chanthaphonh explains, “these objects are communally owned and deeply sacred to the Mijikenda community of Kenya.”

Many other museums resist this interpretation. It is estimated that roughly 400 vigango are still held in the United States, across at least 21 different museums.

Disregarding the uncertainty of the legal status of vigango, the Denver museum decided to return the objects as a gesture of good will. In late 2013, Colwell-Chanthaphonh said he hoped the return would “build relationships across the globe that make a difference in all of our communities.”

Furthermore, the Denver Museum relinquished some of its rights under a 1970 UNESCO Convention on stolen art. UNESCO’s “Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property,” signed November 14, 1970, states that “at the request of the State Party of origin, [museums are required] to take appropriate steps to recover and return any such cultural property imported after the entry into force of this Convention. And that in both States. Concerned, provided, however, that the requesting State shall pay just compensation to an innocent purchaser or to a person who has valid title to that property.”

The museum acquired these objects in 1990, 18 years after this Convention took effect. As a result, the objects could have been subject to return. However, the state party of origin, Kenya, did not approach the museum before the museum initiated their return. Nor did the museum demand compensation, as the Convention states is its right.

It is notable that the Denver museum failed to heed guidelines on due diligence and provenance from UNESCO, as well as the International Council of Museums, of which the Denver Museum is a member, when it originally acquired the objects in 1990. The ICOM Code of Ethics for Museums, adopted unanimously in 1986, sets what it calls “minimum standards” for due diligence. It states, “Due diligence [regarding provenance] should establish the full history of the item since discovery or production.” The Denver museum did not acquire full histories on the vigango, but ICOM and UNESCO lack enforcement mechanisms for these standards.

Provenance—Preemptive Measures

Several other museums have also distinguished themselves in recent years through a renewed attention to the origins of their cultural objects. As with the Denver museum, this regard for provenance extends not only to the acquisition of new objects, but to the review of existing collections of African art.

Similar to the Denver museum, the Baltimore Museum of Art (BMA) has never encountered restitution claims from any African state or entity over its large collection of African art. Nevertheless, it established a Cultural Property Working Group that will be responsible for reviewing the museum’s procedures—past and present—regarding provenance. The goal is to ensure that the museum obeys “not only the letter but also the spirit of the law,” according to Kevin Tervala, the associate curator of African art at the museum. Tervala further hopes that this work will “reinforce the public trust in art museums as ethical and moral institutions.”

The Fowler Museum at the University of California, Los Angeles faces a similar predicament as the BMA, since it possesses a large collection of African art, much of which lacks sufficient “collection information.” However, the Andrew W. Mellon Foundation donated 600,000 USD to the museum for the purposes of studying 7,000 African artifacts donated to the museum in 1965 by Sir Henry Wellcome. Through this project, researchers at the museum are seeking to understand the extent to which “reconstruction of provenance can be enhanced by both comparative ethnographic research as well as scientific materials analysis.” In other words, the museum is digging for answers that others might avoid.

Like the Denver museum, these institutions have gone beyond what is legally required of them to investigate the provenance of cultural objects. Many others may find themselves increasingly compelled to follow suit, as public concern over cultural theft grows in the coming years.

Helsinki Commission Hearing to Probe Autocratic Abuse of Interpol

September 5, 2019 by Bruce Zagaris 1 Comment

The following is an announcement of a Helsinki Commission hearing (TOOLS OF TRANSNATIONAL REPRESSION: How Autocrats Punish Dissent Overseas) on September 12, 2019, that should be of interest to followers of international enforcement cooperation — especially the role of INTERPOL.

WASHINGTON—The Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, today announced the following hearing:

TOOLS OF TRANSNATIONAL REPRESSION

How Autocrats Punish Dissent Overseas

Thursday, September 12, 2019

10:00 a.m. – 12:00 p.m.

Cannon House Office Building

Room 210

Live Webcast: www.youtube.com/HelsinkiCommission

As modern technology has allowed political dissidents and human rights defenders to operate from almost anywhere on the planet, repressive regimes have searched for opportunities to reach those who threaten their rule from afar.

To silence dissent from abroad, autocrats often turn to the International Criminal Police Organization, known as INTERPOL, to file bogus criminal claims seeking the arrest and extradition of their political targets. This abuse of INTERPOL Red Notices and Diffusions enables autocratic governments to harass and intimidate their opponents thousands of miles away, even within free and democratic societies.

The U.S. Helsinki Commission will convene an expert panel to highlight how autocrats today use INTERPOL and other means such as surveillance, abduction, and assassination to punish dissent overseas. Witnesses will suggest how the United States and other democratic nations can defend against these threats to the rule of law domestically and internationally.

The following witnesses are scheduled to participate:

Alexander Cooley, Director, Columbia University’s Harriman Institute for the Study of Russia, Eurasia and Eastern Europe; Claire Tow Professor of Political Science, Barnard College
Sandra A. Grossman, Partner, Grossman Young & Hammond, Immigration Law, LLC
Bruno Min, Senior Legal and Policy Advisor, Fair Trials
Nate Schenkkan, Director for Special Research, Freedom House

Additional witnesses may be added.

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The Commission on Security and Cooperation in Europe, also known as the U.S. Helsinki Commission, is an independent commission of the U.S. Government charged with monitoring compliance with the Helsinki Accords and advancing comprehensive security through promotion of human rights, democracy, and economic, environmental, and military cooperation in 57 countries. The Commission consists of nine members from the U.S. Senate, nine from the House of Representatives, and one member each from the Departments of State, Defense, and Commerce.

EIA’s Reports on Ghana’s Illicit Rosewood Trade Triggers Action from Ghana Government

September 4, 2019 by Bruce Zagaris Leave a Comment

On September 4, 2019, the Environmental Investigation Agency welcomed two investigations recently started in Chana with respect to the illegal rosewood trade from Ghana to China.

The EIA announced plans to release data every month showing the value and volume of rosewood declared as imported to China from Ghana.

Ghanaian Government Investigations

On August 26, 2019, the Ghanaian Minister for Lands and Natural Resources announced the establishment of the “Committee to investigate Allegation of Corruption in Rosewood Trade in Ghana.” The Committee will thoroughly investigate the rosewood sector and propose remedial actions.

EIA also welcomed the decision of the Office of the Special Prosecutor to investigate ongoing corruption and collusion in the rosewood sector in Ghana. EIA said it can provide video, audio, and photographic evidence to the Special Prosecutor to aid the investigation.

EIA said it is willing to help the Committee and Special Prosecutor to examine what appears to be large scale and systemic misdeclaration of timber exported by Ghana. In this regard, in 2017, the United Nations Comtrade Database shows China reports the import of 146,122 cubic meters of timber for a value of US$91.3 million from Chana, while Ghana reported the export of only 14,627 cubic meters of timber for a value of US14.6 million to China.

EIA Report on the Illegal Rosewood Trade in Ghana

The decision by the Ghanaian government to start investigations results from the publication on July 30 by EIA of BAN-BOOZLED: How Corruption and Collusion Fuel Illegal Rosewood Trade in Ghana. The report finds powerful Chinese and Ghanaian traffickers, with the help of ruling party members and complicity at all levels of the government, have established an institutionalized scheme, fueled by bribes, to conceal the illegal harvest, transport, export, and CITES-licensing of the timber.

The EIA report concludes fraudulent use of “salvage permits,” misdeclaration of timber species, use of “escorts” to deal with control points, forging of official documents, and retrospective issuance of CITES permits, are among the mechanisms used to conduct the illegal timber harvesting and trade.

According to the EIA report, Ghana is about to become the first African country and the second in the world, to issue Forest Law Enforcement Governance and Trade (FLEGT) timber licenses under its Voluntary Partnership Agreement (VPA) with the European Union (EU). This will enable timber with a FLEGT license to automatically be considered compliant with the EU Timber Regulation (EUTR) and allowed into the EU market without the due diligence usually required from importers.

Although Ghana has imposed a ban on the harvest of rosewood, intermittent suspensions of the ban have occurred allegedly to permit a few companies to “salvage” abandoned, already logged rosewood. In practice, the suspensions have allowed the illegal harvest and export to continue unabated.

EIA has used undercover investigators who have talked to traders, loggers and agents. EIA learned that the bribes paid to government officials enable the illegal transporting of rosewood through the issuance by local Forestry Commission offices of “conveyance certificates.”

According to the EIA report, Ghana is about to receive up to $50 million in payments for verified emission reductions, following the recent conclusion of an Emission Reductions Payment Agreement (ERPA) with the World Bank under the Forest Carbon Partnership Facility (FCPF).

EIA Recommendations

EIA recommends:

“1. A thorough investigation into corruption and collusion in the government, the Forest Commission and customs administration, and dismantling of the institutionalized illegal logging and trade networks;

Deployment of strict enforcement cooperation between Chinese and Ghanaian authorities to implement the export ban and the CITES regulations, with the direct involvement of the CITES Secretariat;
Regional adoption of a zero export quota for Pterocarpus erinaceus by West African range States until the CITES Appendix II requirements for legal and sustainable trade are met and publicly available;
Immediate inclusion of effective public transparency mechanisms in the timber sector with the participation of Ghanaian civil society and monitoring by a body fully independent of the Forestry Commission.

The report also calls into question whether the EU and World Bank have sufficient accountability and compliance mechanisms to ensure Ghana meets the standards for which the EU is providing access to its market and for which the World Bank is about to provide financing and positive recognition to Ghana for supposedly conforming to reducing emissions from deforestation and forest degradation, forest carbon stock conservation, the sustainable management of forests, and the enhancement of forest carbon stocks in developing countries (activities commonly referred to as REDD+).

The current issue of the IELR will have a more comprehensive article on developments in Ghana.