State of Financial Crime 2023 Report

OFAC and the Turkish Treasury Take Joint Action to Disrupt ISIS Financing

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On January 5, 2023, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a joint action with the Turkish Ministry of Treasury and Finance against two entities and four individuals with ties to the Islamic State of Iraq and Syria (ISIS). Described as a financial facilitation network, the group was found to be instrumental in enabling ISIS recruitment and financial transfers to and from Iraq and Syria.

The designations are pursuant to Executive Order (EO) 13224, which targets terrorist groups and their supporters.

Sanctions Implications

As a result of the joint action, the Turkish Ministry of Treasury and Finance, and the Ministry of Interior, have implemented asset freezes against seven individuals or legal persons associated with facilitating the network’s financing.

Among the entities sanctioned by OFAC is Turkey-based company Sham Express, which ISIS-affiliated individuals used to transfer funds for the Al-Khatuni network. The Al-Khatuni network coordinated with ISIS finance officials to facilitate the transfer of over $500,000 in June 2021.

Other sanctioned persons include:

  • Iraqi national Brukan al-Khatuni, who served as the head of foreign financing in ISIS’s so-called “Wilayat al-Jazirah”
  • Lu’ay Jasim, who used Sham Express to transfer money on behalf of ISIS between Turkey, Syria, and Iraq

OFAC’s joint action is the latest in a series of designations related to the terrorist financing activities of ISIS:

  • June 2022: The Terrorist Financing Targeting Center (TFTC) sanctioned 16 individuals, entities, and groups, including a company that worked directly with ISIS representatives to provide oil products for the Islamic State militant group
  • October 2022: Lafarge SA, a French cement company, was fined $777.8m for payments to ISIS and another regional terrorist group to keep its plant operating in Syria
  • November 2022: Eight companies and four individuals were designated as part of an ISIS cell in South Africa, which was providing financial, technical, or material support to the terrorist group

FATF Resources on Combatting Terrorist Financing

In the Financial Action Task Force’s “Operational Reports on Fighting Terrorist Financing,” it highlights the following resources for firms to help detect, disrupt, punish, and prevent terrorist financing:

  • Anti-money laundering and counter-terrorist financing for judges and prosecutors
  • Detecting Terrorist Financing: Relevant Risk Indicators
  • Counter Terrorism and Counter-Terrorist Financing Information Sharing
  • Terrorist Financing Disruption Strategies
  • Terrorist Financing Risk Assessment Guidance
  • Financing of Recruitment for Terrorist Purposes

The FATF notes that some of these reports are restricted and that firms should contact their FATF domestic authority for further details. 

Key Takeaways

In addition to regularly screening against OFAC’s list of Specially Designated Nationals or Blocked Persons (SDN List), compliance staff should ensure they are familiar with the following terrorist financing red flag indicators:

  • Adverse media or law enforcement information that link individuals to violent extremist groups or activity
  • Transactions that involve certain high-risk jurisdictions
  • Transaction details (such as name, email address, and remittance info) that make references to words, phrases, or numbers linked to violent extremist actors or iconography
  • Excessive email money transfers followed by the depletion of funds through cash withdrawals or third parties
  • The use of crowdfunding, FinTech platforms, and/or cryptocurrencies to finance individuals or groups associated with violent extremism

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Originally published January 12, 2023, updated January 13, 2023

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