The US treasury department’s Office of Foreign Assets Control (OFAC) has designated what it describes as a vast international money laundering and sanctions evasion network of 52 individuals and entities in the UAE, Lebanon, South Africa, Angola, Côte d’Ivoire, the Democratic Republic of the Congo, Belgium, Hong Kong and the UK.

OFAC says the network facilitated the payment, shipment, and delivery of cash, diamonds, precious gems, art, and luxury goods for the benefit of Hezbollah financier, Nazem Said Ahmad, who was designated in December 2019 after OFAC said it had evidence of his material support to Hezbollah.

Concealed beneficial ownership

The luxury goods and art market has been an ideal avenue for Ahmad and his co-conspirators to move funds out of Lebanon, capitalising on schemes to overvalue and undervalue artwork and his background as an experienced collector to exploit the industry’s practices according to OFAC.

It says that since 2012, Ahmad has acquired over US$54 million in works of art from major auction houses, galleries, exhibitions and artists’ studios, often concealing his beneficial ownership by having official invoices drawn up using cover companies, family members, or business associates as the owners.

Shell companies and fraud

The newly designated network includes dozens of individuals and their associated companies allegedly involved in assisting Ahmad in evading US sanctions to maintain his ability to finance Hezbollah and his luxurious lifestyle.

The individuals involved in this network used shell companies and fraudulent schemes to disguise Ahmad’s role in financial transactions according to OFAC.

OFAC warning

Luxury goods market participants have been warned by OFAC to be attentive to tactics and schemes that allow terrorist financiers, money launderers, and sanctions evaders to launder illicit proceeds through the purchase and consignment of luxury goods.

A detailed press release on the newly designated network and links to additional material on money laundering and terrorist financing in the art trade can be found here.

Categories: Trade Based Financial crimes News