Israeli investors targeted by banking war in Turkey – Opinion


Last week Turkey sentenced a long list of Western financial institutions, including Goldman Sachs, Bank of America, JPMorgan, Credit Suisse, Barclays and others, to heavy fines for short selling without proper notification. The move comes just a week after foreign investors withdrew nearly billions of US dollars. of Turkey’s stock and bond markets. While some analysts interpret this dynamic as action and reaction to President Recep Tayyip Erdogan’s sacking of Central Bank Governor Naci Agbal in March, there is strong reason to argue that these are in fact the last measurements in a current tit-for-tat bank. war between the West and Turkey for the financing of terrorism and money laundering.

In the mid-1990s, US law enforcement identified Saudi billionaire Yassin Al-Kadi as one of Hamas, Osama bin Laden and Al-Qaeda’s main money launderers, using banks Turkish organizations and a network of charitable and non-profit organizations. Since, despite that many law enforcement agencies – including the G7 Intergovernmental Financial Action Task Force (FATF), the US Office of Foreign Assets Control (OFAC), the UK Financial Services Authority and the EU – have taken action against Turkey, it continues to serve as a global hub for terrorist financing and money laundering. Al-Kadi, by the way, still operates freely in Turkey, with President Erdogan publicly declaring that he trusts Al-Kadi like he trusts his own father.

A 2019 report by Nordic Monitor, which covers extremist religious, ideological and ethnic movements, with a particular focus on Turkey, highlights the role of the Turkish National Intelligence Organization (MÄ°T) in facilitating the funding of Al-Qaeda and al-Shabab through its banking system. . And it does not stop there; Turkey is also a major hub for the circumvention of sanctions by Iran and North Korea. Turkey’s second-largest public lender, Halkbank, faces indictment in the Southern District of New York for facilitating a $ 20 billion ploy to circumvent US sanctions against Iran. This indictment of Halkbank is the likely trigger for a tit-for-tat banking war, the results of which we are witnessing today.

Some of the first Turkish banks to be penalized by the West are actually based in Turkish-occupied northern Cyprus. OFAC named two of these banks, First Merchant Bank and Infobank, as the “main money laundering problem” financial institutions, and the UK’s Financial Services Authority fined the Turkish bank, based in northern Cyprus, for anti-money laundering failures.

ISRAELI INVESTORS are currently being targeted and bombarded with online ads encouraging them to invest in the real estate sector in northern Cyprus. The high-risk nature of doing business in Northern Cyprus and its banking sector is illustrated by multiple instances where foreign investors and depositors have not been protected and have faced significant losses or hardship in the process. lack of traditional regulatory guarantees. In 2012, HSBC was the subject of US legal proceedings brought by foreign investors after HSBC solicited their investments in the real estate sector of northern Cyprus when the self-proclaimed authorities did not have the sovereign right to issue securities to property.

Due to the contested political status of Northern Cyprus, the territory is excluded from the international banking and SWIFT payment system; its security and financial infrastructure have been undermined by reports of money laundering and involvement in the illicit drug trade. Inadequate regulatory regime in Northern Cyprus leaves victims of fraud without international legal recourse: Mondial Private Bank allegedly used non-existent regulations in northern Cyprus to execute an elaborate plan under which it effectively defrauded a Brazilian-Dutch company for $ 35 million after failing to return deposited funds. The company has no other legal recourse but to sue Mondial Bank and Turkish businessman Bensen Safa in the highly politicized North Cypriot courts, where the judiciary lacks independence.

A senior executive member of Mondial Private Bank, Safa is also a co-owner of Islamic bank Kibris Faisal Islam Bankasi and an investment subsidiary, Faisal Islamic Investment Corporation Ltd with several shareholders who cite their address as army headquarters. Sudanese; five other Sudanese persons listed as members of Sudanese parliament or register their addresses in parliament buildings; and more particularly the former Sudanese vice-president Aly Osman Mohamed Taha. Taha is considered “the chief architect” of the Sudanese campaign of genocide and mass rape in the Darfur region in the early 2000s, resulting in up to half a million deaths caused by military and state militias from Sudan. Taha has also been accused of aiding and abetting Islamic fundamentalists in a plot to assassinate a former Egyptian president and of knowingly providing safe haven for known terrorist leaders such as Osama bin Laden.

Isaias Dahlak, a secret Eritrean financier who is currently funding Eritrean forces in the Tigray conflict, allegedly used the northern Cyprus offshore banking ecosystem, of which Mondial Private Bank is a part, to fund its illegal operations outside the jurisdiction of the international community and law enforcement.

Israeli investors should be warned: The Biden administration just asked Congress to increase the Treasury Department’s Financial Crime Network (FINCEN) by 50%. Retaliation for Turkey’s latest move is sure to cause collateral damage to anyone still dealing with Turkey’s banking system, and in particular its northern Cypriot satellites.

Get out while you still can.

The writer established and headed the Mossad Assets Tracing Unit, where he led national and international efforts to combat the financing of terrorism. Israel’s prime minister later appointed him as his special adviser on economic warfare.

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