Sanctions against oligarchs are like those used against Osama Bin Laden

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  • Sanctions against oligarchs are no different from those against Osama bin Laden, an expert has said.
  • Shane Riedel, a money transfer expert, said authorities were using a similar legal framework.
  • He thinks the oligarchs use the same type of informal system to move money as bin Laden.

Western sanctions against Russian oligarchs are no different from those against Osama bin Laden, one expert said, and he has seen the same type of informal, secret network of asset transfers develop among the oligarchs.

The sanctions were imposed on oligarchs close to Vladimir Putin in response to his invasion of Ukraine, in a bid to put pressure on the Russian president.

Russian oligarchs – among the wealthiest people in the world – have had their assets frozen, from superyachts, works of art and estates to private jets. Money transfer experts, however, noted an increase in asset transfers a few months before Russia invaded Ukraine.

Shane Riedel, financial crime expert and CEO of Elucidate, which analyzes money movement patterns, said: “How is an oligarch punished differently than Osama bin Laden was? exactly the same tool, exactly the same legal framework that is used.”

“If we look at how transactions evolve and the reallocation of resources and assets, and the increase in new offshore companies, what we get out of this is an absolutely accelerated mechanism to create alternative payment platforms,” Riedel said.

These alternative money transfer networks, called hawala, take place outside traditional banking systems. No documentation is required, so no records of transactions exist, making it an ideal method of financing terrorism.

“Hawalas has taken thousands of years to develop. Now they’re saying, ‘we’re going to put in place a tactical mechanism to allow us to get around the sanctions,’ which is the same as the proxies – different purposes, different people,” Reidel said.

During a hearing on hawalas and clandestine terrorist financing mechanisms in the United States Senate on November 14, 2001, Indiana Senator Evan Bayh said that bin Laden used this system to avoid efforts to stop his flow of money.

“One system bin Laden and his terrorist cells use to secretly move funds around the world is that of hawalas, an ancient and once largely unknown system of money transfer,” Bayh said.

Bayh also said that the United States recognized the danger of unregulated hawalas and that Congress decided to “regulate their activities in 1994, with the passage of a law requiring check cashing companies and businesses informal financial institutions like hawalas to register with the government”. The law had little effect on hawalas.

Maryland Senator Paul Sarbanes told the hearing that “in the aftermath of 9/11, we learned that Osama bin Laden’s terrorist network not only exploited vulnerabilities in regulatory and enforcement procedures of the formal financial system, but also used the informal system to move large sums of money around the world, without leaving electronic or paper fingerprints.”

“The system’s relative anonymity and lack of legal record keeping make it an attractive mechanism for drug traffickers, arms brokers, tax evaders, corrupt officials and terrorists looking to move money surreptitiously” , said Sarbanes.

Sanctions against Osama bin Laden

The sanctions targeted terrorists, including bin Laden and members of al-Qaeda, for trying to drag the United States into a full-scale war in the Muslim world that would overthrow the existing world order and establish an Islamic state. unique.

US intelligence and law enforcement agencies had monitored bin Laden and al-Qaeda throughout the 1990s, warning senior government officials of a growing threat.

In 1996 bin Laden declared a jihad, a religiously sanctioned war, against the United States, leading to violent attacks on American interests abroad. Bin Laden thought a strike on the United States would convince the government to withdraw from the Muslim world.

Riedel said the only difference between the sanctions against the oligarchs and those against bin Laden is why they were sanctioned in the first place.

“It’s the exact same government agency that issues these two checks – it’s OFAC, it’s HMT,” Riedel said, referring to the Office of Foreign Assets Control in the United States and HM Treasury in the UK.

“If I knew there was a legal regime that would prevent me from transacting, and I knew there was an informal regime that would allow me to circumvent that…you don’t need to to be a complete genius – why wouldn’t you do what worked before?”

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