EB-5: Pathway to US Citizenship or Money Laundering Concern?

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Sanctions or restrictive measures in European Union (EU)1 terminology have become a key instrument in the toolbox of policymakers, including policymakers in the EU. Often the public discussion centers on sanctions implemented against governments of countries such as Iran2 or the Russian Federation.3 In Europe, counterterrorism sanctions measures receive far less public attention and are mainly addressed when challenged in European courts.4 However, sanctions measures can be used to disrupt terror organizations’ ability to function by targeting a set of key individuals that facilitate the functioning of the group.

Currently, sanctions are used on a global, regional and national level as part of a broad toolset to prevent the financing of terrorism. This system was spearheaded by the United Nations Security Council (UNSC). In 1999, UNSC established a global sanctions regime that targeted the Taliban and al-Qaida following the terror attacks against the U.S. embassies in Nairobi and Darussalam in 1998. Resolution 1267 (1999),5 which established this global sanctions’ regime, demanded that the Taliban seize support and providing sanctuary for terrorists in Afghanistan6 and hand over Osama bin Laden for court procedures against him.7 In order to enforce these demands, the UNSC established a global sanctions regime and the 1267 sanctions committee8 was charged with its management. From the onset, this new sanctions’ regime included the provision of a total and global asset freeze, including that the provision of assets is prohibited to the Taliban and any entity owned or controlled “directly or indirectly” by them.9

Following the 9/11 terrorist attacks, UNSC augmented the already existing targeted sanctions regime with a general global counterterrorism regime. Resolution 1373 (2001)10 demanded that member states adjust their national legislation for better counter-terrorist financing. The implementation of these two counterterrorism structures was subsequently included as Recommendation 6 of the Financial Action Task Force 40 Recommendations.11 In addition to implementing the global sanctions’ regime, Recommendation 6 and its interpretative note calls on member states to designate individuals and entities according to national or supranational sanctions regimes based on Resolution 1373 (1999).12

Based on these provisions, the EU established a twofold counterterrorism sanctions structure. On the one hand, the EU implements the global security council sanctions regime targeting the Islamic State (IS) and al-Qaida.13 On the other hand, the EU has developed a separate counterterrorism sanctions regime based on Resolution 1373 (2001). This regime consists of two lists: a list of individuals and entities whose funds have to be frozen and against which enhanced measures related to police and judicial cooperation are employed,14 and a list of individuals and entities against which only enhanced measures related to police and judicial cooperation are levied.15

Two functions of counterterrorism sanctions

Sanctions regimes against non-state actors fulfill two basic functions, particularly if they target terrorists groups. The first function is a political one. Establishing such a regime and naming individuals and entities on the respective sanctions list helps to clarify the phenomenon. Since member states within the United Nations have not been able to agree on a universally accepted definition of the term “terrorism,”16 the ISIL (Da’esh) and al-Qaida Sanctions Committee and Sanctions List presents a global list with legal force of agreed terrorists and terrorist entities. Therefore, this list demarcates the commonly agreed political space of the global terrorism phenomenon. While many member states, including the EU, define the phenomenon broader and consequently include additional individuals and entities in their definition of terrorism, this is done on a national, supranational level and is not covered by the UNSC’s regime. The EU’s terror list fulfills this wider function, including groups such as Hamas or the Sendero Luminoso, Spanish for “shining path,” which also allows the EU to address region-specific forms of terrorism.17

While it is important to name terror groups and their leaders on a public sanctions list, the operational impact on the group’s ability to function will likely remain limited. The provisions that assets should not be provided “directly or indirectly” aims at increasing operational effectiveness. It is unlikely to assume that a terror financer would open a bank account with the name Ayman al-Zawahiri or that the al-Qaida affiliate Abu Sayyaf would attempt to register a business under the name of the organization. However, this transfers the burden of operational effectiveness exclusively to the private sector implementers of the sanctions provisions. Contrary to government authorities, they often do not have access to detailed confidential terrorism-related information or additional identifying information and consequently regularly face significant challenges of ensuring that funds are not “indirectly” provided.

Sanctions measures’ ability to disrupt terrorist groups can be increased significantly if a specific, key group of individuals related to the functioning of the group are targeted, known as their “facilitators.” These individuals are instrumental for the operational functioning of the group, in particular within its financial affairs. Groups such as IS or the global network of al-Qaida cannot function without expertise of these facilitators. In turn, similar to professional money launderers, these facilitators cannot function without the ability to travel, open bank accounts and register businesses. All of these activities are significantly inhibited if the individual is named publicly on a sanctions list, thus becoming part of compliance checks in financial institutions and other private sector stakeholders. The Office of Foreign Assets Control (OFAC) currently does the most extensive targeting of this category of individuals. OFAC’s Specially Designated Nationals and Blocked Persons (SDN) list includes a significant number of groups and entities linked to terrorism.18 It also includes several thousand individuals and targets the level below the top leadership of the respective terror organization, particularly financial facilitators.19 While terrorist groups will often be able to solicit the services of other professionals when a facilitator is targeted with sanctions measures, having to find new expert support temporarily disrupts the activities of the group. Furthermore, when facilitators are targeted regularly by sanctions measures and can no longer operate with impunity, the operational risk and operational costs for these individuals increases, reducing the amount of assets available to the terror group for their other activities. Over the last few years the UNSC ISIL (Da’esh) and al-Qaida Sanctions Committee began to target the level of terrorism facilitators increasingly.20 However, due to its concentration on the global threat posed by IS, al-Qaida and its affiliated individuals and entities, it will not be able to counter important local and regional terrorist threats worldwide.

The EU’s terror list based on Resolution 1373 (2001) is limited. Currently, this sanctions list includes 47 entities and the names of 57 individuals.21 Furthermore, the list does not seem to target financial facilitators specifically given that several thousand foreign terrorist fighters went from the EU to Syria and Iraq in recent years.22 It seems very likely that terrorist facilitators operate from European soil and that international financial terrorism structures have connections to Europe. Recent arrests facilitated by Europol also seem to highlight this.23 Furthermore, the changing structure of IS from a hierarchically structured group focused on conquering and holding territory to a global network of terror cells is presenting the efforts to curb terrorist financing with new challenges.24

Conclusion

Currently, the EU does not use its counterterrorism sanctions tools to its fullest operational capacity to disrupt the operations of terror groups. Instead, it seems to rely on police and judicial processes within member states to accomplish this. Given that sanctions are a preventative tool, they can be employed in addition and in parallel to punitive processes, such as court proceedings, and can be effectively employed to disrupt the activities of individuals and entities outside the reach of judicial authorities. This apparent gap in the counterterrorism toolbox of the EU is regrettable.

The increased efforts of the EU to combat terrorist financing since 2015, following the rise of IS in Iraq and Syria,25 demonstrates that the EU’s political decision-makers acknowledge the continuing threat of terrorist financing for the EU. In recent years, the EU has passed a number of important new directives to curb the ability of terrorist facilitators to operate, including through the use of new technologies such as cryptocurrencies.26 Given this re-energized effort, the time to include counterterrorism sanctions measures that go beyond the UNSC’s ISIL (Dae’sh) and al-Qaida Sanctions Committee and target financial facilitators that are particularly relevant to Europe and cannot be addressed on the global sanctions list seems to have come. Leaving this disruptive instrument in the toolbox seems to be an unnecessary and easily rectified omission.

Dr. Hans-Jakob Schindler, senior director, Counter Extremism Project, New York, USA and Berlin, Germany and former coordinator ISIL, Al-Qaida and Taliban Monitoring Team, United Nations Security Council, hjschindler@counterextremism.com

  1. “Sanctions: how and when the EU adopts restrictive measures,” European Council, https://www.consilium.europa.eu/en/policies/ sanctions/
  2. “EU restrictive measures against Iran,” European Council
  3. “EU restrictive measures in response to the crisis in Ukraine,” European Council, https://www.consilium.europa.eu/en/policies/sanctions/ ukraine-crisis/
  4. “Judgment of the General Court,” European General Court of Justice, March 6, 2019, http://curia.europa.eu/juris/document
  5. “Resolution 1267 (1999),” United Nations Security CouncilM, October 15, 1999, http://unscr.com/en/resolutions/doc/1267
  6. Ibid. See in particular paragraph 1
  7. Ibid. See in particular paragraph 2
  8. Ibid. See in particular paragraph 6; “Resolution 2253 (2015),” United Nations Security Council, December 17, 2015, https://www.undocs. org/S/RES/2253%20(2015); “Resolutions 1333 (2000),” United Nations Security Council, December 19, 2000, https://www.undocs.org/S/ RES/1333%20(2000); “Resolution 1390 (2002),” United Nations Security Council, January 28, 2002, https://www.undocs.org/S/RES/1390%20 (2002); “Resolution 1333 (2000),” United Nations Security Council, December 19, 2000, https://www.undocs.org/S/RES/1333%20(2000)
  9. “Resolution 1267 (1999),” United Nations Security Council, October 15, 1999, http://unscr.com/en/resolutions/doc/1267
  10. “Resolution 1373 (2001),” United Nations Security Council, September 28, 2001, http://unscr.com/en/resolutions/doc/1373
  11. “International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation. The FATF Recommendations,” Financial Action Task Force, June 2019, https://www.fatf-gafi. org/media/fatf/documents/recommendations/pdfs/FATF%20 Recommendations%202012.pdf
  12. Ibid, 38.
  13. “Different types of sanctions,” European Council, https://www.consilium. europa.eu/en/policies/sanctions/different-types/
  14. “Council Decision (CFSP) 2019/25,” Official Journal of the European Union, January 8, 2019, https://eur-lex.europa.eu/legal-content/en/TXT/ HTML/?uri=CELEX:32019D0025&from=EN
  15. “Council Common Position 2009/468/CFSP,” Official Journal of the European Union, June 5, 2009, https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:32009E0468&qid=1412596355797&from=EN
  16. “Frequently asked questions about UN efforts to combat terrorism,” Counter-Terrorism Executive Directorate, https://www.un.org/News/dh/ infocus/terrorism/CTED_FAQs.pdf
  17. “Council Decision (CFSP) 2019/25,” Official Journal of the European Union, January 8, 2019, https://eur-lex.europa.eu/legal-content/en/TXT/ HTML/?uri=CELEX:32019D0025&from=EN
  18. “SDN by Programs,” U.S. Department of the Treasury, https://www. treasury.gov/ofac/downloads/prgrmlst.txt
  19. “Treasury Sanctions East African Facilitator of Intricate ISIS Financial Network,” U.S. Department of the Treasury, September 7, 2018, https:// home.treasury.gov/news/press-releases/sm476
  20. “The List established and maintained pursuant to Security Council res. 1267/1989/2253,” United Nations Security Council, August 8, 2019, https://scsanctions.un.org/fop/fop?xml=htdocs/resources/xml/en/ consolidated.xml&xslt=htdocs/resources/xsl/en/al-qaida-r.xsl
  21. “Council Common Position 2009/468/CFSP,” Official Journal of the European Union, June 15, 2009, https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:32009E0468&qid=1412596355797&from=EN
  22. “Europol Information System,” Europol, https://www.europol.europa. eu/activities-services/services-support/information-exchange/ europol-information-system
  23. “Counter-Terrorist Operation: Spanish National Police Disrupts Criminal Organisation which Financed Al-Qaeda,” Europol, June 19, 2019, https://www.europol.europa.eu/newsroom/news/ counter-terrorist-operation-spanish-national-police-disrupts-criminalorganisation-which-financed-al-qaeda
  24. Dr. Hans-Jakob Schindler, “Emerging sanctions challenges for global counter-terrorism,” ACAMS Today Europe, June 2, 2019, https://www.acamstoday.org/ emerging-sanctions-challenges-for-global-counter-terrorism/
  25. “Communication from the Commission to the European Parliament and the Council on an Action Plan for strengthening the fight against terrorist financing,” Council of the European Union, February 4, 2016, http://data.consilium.europa.eu/doc/document/ST-5782-2016-INIT/en/ pdf
  26. “European Union amended Directive (EU) 2015/849,” Official Journal of the European Union, May 30, 2018, https://eur-lex.europa.eu/ legal-content/EN/TXT/PDF/?uri=CELEX:32018L0843&from=EN