INTERVIEW | While clandestine ship-to-ship oil transfers allegedly sending Iranian oil to China have grabbed the headlines, there is a complex web of financial dealings including large-scale money laundering in Southeast Asia that needs to be addressed.
According to US Treasury Terrorism and Financial Intelligence Undersecretary Brian Nelson, global players have likely identified the region as a potential weak link to be exploited.
As part of his four-day trip to the region, Nelson also visited Singapore, which has just been embroiled in a multibillion money laundering case that saw 10 Chinese nationals charged with laundering US$2.2 billion earned from criminal activities abroad.
Asked if it was potentially the tip of the iceberg indicating that regional channels were being used in this way, he replied:
“I don’t think it’s the tip of the iceberg necessarily but it goes to the general dynamic we have, which is that these illicit actors will always go to the weakest link that they perceive.
“Then they try to engage in what can be very sophisticated money-laundering schemes, as we saw in Malaysia’s 1MDB case.
“From our perspective, we are trying bilaterally and multilaterally to enhance our capacity to manage the risks associated with money laundering and terrorism financing,” said Nelson, who attended both UCLA and Yale Law School.
Nelson said Iran would not have been able to transport its sanctioned oil without Malaysia and Singapore.
He added that the US is unable to be directly responsible for deploying Anti-Money Laundering/Countering the Financing of Terrorism compliance programmes concerning the assets that they manage.
“That has created a real national security risk around the type of money laundering that we saw in 1MDB. And I think we’re trying to fix that in the US but I also think the goal of all of this is to learn from those schemes and then deploy the type of risk-based approach compliance programmes so that we can meaningfully know that we’re managing those risks,” he added.
From Sri Lanka to Palestine
During the decades-long Sri Lankan Civil War, Malaysia and Singapore, with their Ceylonese Tamil diaspora, were also cited as a primary source of funding for the Liberation Tigers of Tamil Eelam movement.
This indicates that, to some extent, this has been a long-standing problem in the region but Nelson feels that the situation has improved since that era.
He pointed to the work of the Financial Action Task Force, an inter-governmental organisation founded on the initiative of the G7 nations to develop policies to combat money laundering and terrorism financing.
“Across the globe, there have been significant enhancements in the way we manage money laundering and terrorist financing risks and the standards have gone up quite a bit since that time.
“In terms of institutional capacity and awareness through information exchanges, we’re properly invested in making the financial system and other critical sectors like the marine sector much more resilient.
“I think that process has happened over time,” he said.
“From our perspective, there’s a difference between Hamas and the Palestinian people and we are very focused - not only at the Treasury Department but across our government - about doing everything we can to support humanitarian assistance going to the Palestinian people.
“One way that we can do that at the Treasury Department is to work with those jurisdictions that we know Hamas and other groups have historically sought to utilise to fundraise and prevent that type of activity for many reasons.
“We think it’s key to ending this conflict and making sure that those resources are making it to the Palestinian people and not in service of this conflict.
“So I think we have a lot of shared interests in raising and making our financial systems more resilient to this type of abuse by terrorist groups and other illicit actors,” said Nelson. - Mkini
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