Saudi Arabia accused of turning a blind eye to international terrorist financing by Global Watchdog

Saudi Arabia has come under heavy criticism for its inability to tackle money laundering and international terrorist financing in a new report that will make reading uncomfortable for authorities in Riyadh.

A report published on September 24 by the Financial Action Task Force (FATF) – a Paris-based intergovernmental body – said: “Saudi Arabia does not effectively investigate and prosecute those involved in larger-scale activities or [money laundering] activity ”and“ does not effectively confiscate the proceeds of crime ”.

He also highlighted the lack of attention paid to the financing of terrorist groups outside the country. While acknowledging that it is “understandable to prioritize national concerns”, the report also states that “the authorities’ almost exclusive attention to [terrorist financing] misdemeanors means authorities do not prioritize disruption [terrorist financing] support for threats outside the kingdom. “

The sums involved in all of this could be significant. The proceeds of crime in Saudi Arabia are estimated to be between $ 12 billion and $ 32 billion. The main areas in which criminals make money are believed to be drug trafficking, corruption, counterfeiting and piracy.

Most of the profits go elsewhere, with around 70-80% of the proceeds of crime leaving the kingdom. Despite this, Saudi authorities did not repatriate any criminal proceeds from abroad during the four years from 2013 to 2016.

A major problem is that Saudi Arabia does not seek cooperation from other countries to combat money laundering and the proceeds of crime. Investigating authorities also suffer from inadequate IT systems, which makes it particularly difficult to prosecute complex money laundering cases. “Investigations are often reactive rather than proactive and tend to be straightforward, straightforward and single-layered,” the report says.

The amount of proceeds of crime seized in Saudi Arabia has increased but the numbers are still low, the report adds.

Last year the government went to great lengths to extract more funds from those it claims to be guilty of corruption. In November 2017, several hundred members of the business elite were arrested on charges of embezzlement of 100 billion dollars. It is not known exactly how many have been recovered from these people since, but the crackdown appears to have prompted some people to send more money of the Kingdom.

Terrorist funds

There are also gaps identified in terms of terrorist financing. More than 1,700 terrorist financing investigations have been carried out by Saudi authorities since 2013, resulting in more than 1,100 convictions. However, authorities tend to be rather selective about the type of people they are looking for.

The report indicates that there have been few or no convictions for stand-alone terrorist financing offenses; most prosecutions are for financing related to other terrorism-related offenses. Authorities also pay little attention if terrorism takes place outside the kingdom.

“Saudi Arabia’s comprehensive strategy to combat terrorist financing focuses primarily on the use of law enforcement measures to halt terrorist threats directed against the kingdom and its immediate surroundings,” the report notes. “The Saudi authorities are particularly focused on [terrorism financing] crimes at the expense of international [terrorism financing] networks. “

This analysis is embarrassing for Riyadh and its allies such as the United Arab Emirates in light of their ongoing dispute with Qatar. They generally claim that they are doing all they can to combat terrorist financing while claiming that Qatar actively supports it.

“The UAE has done a lot to prevent individuals from donating to charities with secret links to terrorism,” UAE Foreign Minister Anwar Gargash said at an event in Chatham House in London in July 2017. “Our goal is to stop private financial support for terrorism from anywhere in the Gulf … But in Qatar, it is too often the state that directly supports terrorist groups.

Report problems

The FATF report also states that while anti-money laundering and terrorist financing measures are “strong and well established” in the country’s banks and finance companies, implementation is ” not so strong ”among small non-financial businesses and suspicious transaction reports (STRs)“ Remains a concern for all industries. ” In particular, he notes that “STRs are not submitted on time and that the low number of STRs related to terrorist financing reported is a major concern”

It should be noted that the current situation may not be as bad as the report suggests, as the Saudi authorities have recently taken steps to improve things. A new law on combating money laundering was adopted in October 2017 and another on crime and terrorist financing was adopted the following month (including a exceptionally wide definition of what constitutes terrorism).

The new laws were coming just as the FATF was conducting its research for this report and it is too early to judge their effectiveness, but the situation may well have improved. For example, the report suggests that new powers in the anti-money laundering law “could help Saudi Arabia confiscate larger amounts of foreign currency” at the border.

FATF report serves as a useful corollary and counterpoint to a recent US State Department report on Terrorism in the World, which offered a broadly favorable analysis of Saudi efforts and emphasized cooperation between Washington and Riyadh.

This contrasts with what President Donald Trump said before he took office. In a 2015 book, It’s time to be tough, he called Saudi Arabia “the world’s largest terrorist donor”.

The previous administration of Barack Obama also criticized Riyadh. In one Memo 2009 Written by then Secretary of State Hillary Clinton and then published by Wikileaks, it noted that “donors in Saudi Arabia are the most important source of funding for Sunni terrorist groups in the world … Taliban, LeT [Lashkar e-Tayyiba], and other terrorist groups, including Hamas, which likely raise millions of dollars a year from Saudi sources. “

There was no official reaction from the Saudi authorities to the release of the FATF report.

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