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Treasury’s Office of Payment Integrity Began Using Enhanced Processes, including Machine Learning AI, to Deal with Increased Fraud and Improper Payments Since the Pandemic

WASHINGTON – Today, the U.S. Department of the Treasury announced that its latest efforts in taking a technology and data-driven approach to fraud and improper payment prevention enabled the prevention and recovery of over $4 billion in fraud and improper payments this fiscal year (FY) (October 2023 – September 2024), up from $652.7 million in FY23. This increase reflects dedicated efforts by Treasury’s Office of Payment Integrity (OPI), within the Bureau of the Fiscal Service (Fiscal Service) to enhance its fraud prevention capabilities and expand offerings to new and existing customers.

Highlights include:

• Expanding risk-based screening resulting in $500 million in prevention.
• Identifying and prioritizing high-risk transactions resulting in $2.5 billion in prevention.   
• Expediting the identification of Treasury check fraud with machine learning AI resulting in $1 billion in recovery. 
• Implementing efficiencies in payment processing schedule resulting in $180 million in prevention. 

“Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money. Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts,” said Deputy Secretary of the Treasury Wally Adeyemo. “We’ve made significant progress during the past year in preventing over $4 billion in fraudulent and improper payments. We will continue to partner with others in the federal government to equip them with the necessary tools, data, and expertise they need to stop improper payments and fraud.” 

In addition to enhanced capabilities, Treasury is focused on establishing and strengthening partnerships with new and high-risk programs to increase access to and usage of Treasury’s payment integrity solutions, including federally-funded state administered programs. For instance, in May 2024, Treasury and the Department of Labor announced^[1] a data-sharing partnership to provide state unemployment agencies with access to Do Not Pay Working System data sources and services through the Unemployment Insurance Integrity Data Hub. 

As the federal government’s central disbursing agency, Treasury securely disburses approximately 1.4 billion payments valued at over $6.9 trillion dollars to more than 100 million people annually. At a time when losses from fraud in the financial sector continue to rise every year, with online payment fraud expected to cumulatively surpass $362 billion by 2028^[2], Treasury is uniquely positioned to support federal programs proactively mitigate the risk of financial fraud by leveraging data and emerging technologies.

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WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned eighteen companies, individuals, and vessels for their ties to Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF)-backed Houthi financial official Sa’id al-Jamal (al-Jamal) and his network. Included in this action are the captains of vessels transporting illicit oil as well as the companies that managed and operated these ships. The revenue from al-Jamal’s network continues to enable Houthi attacks in the region, including missile and unmanned aerial vehicle attacks on Israel and commercial vessels transiting the Red Sea. 

“The Houthis remain reliant on Sa’id al-Jamal’s international network and affiliated facilitators to transport and sell Iranian oil, continuing their campaign of violence,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Treasury remains committed to utilizing all available tools to disrupt this key source of illicit revenue that enables the Houthis’ destabilizing activities.”

Today’s action is being taken pursuant to counterterrorism authority Executive Order (E.O.) 13224, as amended. OFAC designated al-Jamal pursuant to E.O. 13224, as amended, on June 10, 2021, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF. OFAC designated the IRGC-QF pursuant to E.O. 13224 on October 25, 2007, for providing material support to multiple terrorist groups. The U.S. Department of State’s designation of Ansarallah (commonly known as the Houthis) as a Specially Designated Global Terrorist (SDGT), pursuant to E.O. 13224, as amended, became effective on February 16, 2024. 

SPRAWLING ILLICIT sHIPPING network

The al-Jamal network relies on a network of front companies and willing partners in multiple jurisdictions to facilitate the sale of Iranian petroleum and petroleum products for the benefit of the Houthis.  For example, in late 2023, the Panama-flagged crude oil tanker KAPOK (IMO 9315654), owned by Marshall Islands-registered Changtai Shipping Ltd, transported over a million barrels of crude oil, worth tens of millions of dollars, on behalf of al-Jamal and sanctioned Türkiye-based, Houthi-associated businessman Abdi Nasir Ali Mahamud.

Changtai Shipping Ltd is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, al-Jamal. The KAPOK is being identified as blocked property in which Changtai Shipping Ltd has an interest. 

Similarly, Marshall Islands-based Motionavigations Limited and United Arab Emirates-based Indo Gulf Ship Management LLC served as the registered owner and operator, respectively, of a vessel that was used by the al-Jamal network to ship several millions of dollars’ worth of Iranian fuel oil. 

UAE-based Ukrainian national Yevhen Skriabin owns and operates Motionavigations Limited, in addition to UAE-based companies Eco Max Trading FZE and Eco Max FZE. Established in June of 2019, Eco Max Trading FZE registered its subsidiary Eco Max FZE in 2020 to operate its maritime-related business. As part of this business, Eco Max FZE operates and manages multiple vessels, including the Cook Islands-flagged vessels MARBEL (IMO 9220938), TROPHY (IMO 9220940), and ONYX (IMO 9252400), and the Palau-flagged vessels LIANA (IMO 9236755), GRATIA (IMO 9260055), and the JUVENIS (IMO 9260067). The MARBEL, TROPHY, and LIANA have all been linked to illicit Iranian oil shipments. 

UAE and India-based Indian national Rahul Rattanlal Warikoo Rattanlal acts as the managing director of Indo Gulf Ship Management LLC. Rattanlal has served in management roles for U.S.-designated companies Safe Seas Ship Management FZE and Aurum Ship Management FZC, which have been implicated in Iranian oil shipments for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and the al-Jamal network. Hong Kong and India-based Indian national Dipankar Mohan Keot (Keot) serves as the technical manager of Indo Gulf Ship Management LLC. In this role, Keot is responsible for monitoring vessel operations, including the budget and expenditure of the vessels under Indo Gulf Ship Management LLC’s oversight. 

Indo Gulf Ship Management LLC currently serves as the manager and operator of the Barbados-flagged KUKKI (IMO 9247388). 

Motionavigations Limited and Indo Gulf Ship Management LLC are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or service to or in support of al-Jamal. 

Yevhen Skriabin is being designated pursuant to E.O. 13224, as amended, for owning or controlling, directly or indirectly, Motionavigations Limited. 

Eco Max Trading FZE is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Yevhen Skriabin.  Eco Max FZE is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Eco Max Trading FZE. The MARBEL, TROPHY, ONYX, LIANA, GRATIA, and the JUVENIS are being identified pursuant to E.O. 13224, as amended, as property in which Eco Max FZEhas an interest. 

Rahul Rattanlal Warikoo Rattanlal and Dipankar Mohan Keot are being designated pursuant to E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, Indo Gulf Ship Management LLC. The KUKKI is being identified as property in which Indo Gulf Ship Management LLC has an interest. 

vessel captains

The al-Jamal network is not only reliant on its system of companies, managers, and vessels to transport Iranian commodities, but also on the individuals who oversee these shipments. 

In mid-August, Iranian national Ali Barkhordar, while acting as the master of the U.S.-sanctioned vessel YORGOS, formerly known as the OHAR and ARTURA, conducted a ship-to-ship transfer with the U.S.-sanctioned Guyanese-flagged vessel OLYMPICS, previously known as the LADY SOFIA, captained by Pakistani national Wahid Ullah Durrani, to load sanctioned oil cargo on behalf of al-Jamal. 

Ali Barkhordar and Wahid Ullah Durrani are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, al-Jamal. 

SANCTIONS IMPLICATIONS 

As a result of today’s action, all property and interests in property of these individuals and entities named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of designated or blocked persons. U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons within the United States, and all U.S.-incorporated entities and their foreign branches. Non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of OFAC regulations may result in civil or criminal penalties. OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under sanctions laws and regulations administered by OFAC. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. For additional information on complying with U.S. sanctions and export control laws, please see Department of Commerce, Department of the Treasury, and Department of Justice Tri-Seal Compliance Note.

Furthermore, engaging in certain transactions with the individuals designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Pursuant to this authority, OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of any foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist. 

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Click here for more information on the individual and entities identified today.

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WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is targeting three entities and one individual for their involvement in the development and production of Russia’s Garpiya series long-range attack unmanned aerial vehicle (UAV). The Garpiya has been deployed by Russia in its brutal war against Ukraine, destroying critical infrastructure and causing mass casualties. Designed and developed by People’s Republic of China (PRC)-based experts, the Garpiya is produced at PRC-based factories in collaboration with Russian defense firms before transferring the drones to Russia for use against Ukraine. 

These private companies and individuals were involved in the development and production of military equipment for a U.S.-sanctioned Russian defense firm for use by the Russian military in Ukraine.  While the United States previously imposed sanctions on PRC entities providing critical inputs to Russia’s military-industrial base, these are the first U.S. sanctions imposed on PRC entities directly developing and producing complete weapons systems in partnership with Russian firms. 

“Russia increasingly relies on the expertise of foreign professionals and the import of sophisticated technologies to sustain its weapons program and advance its military campaign against Ukraine,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “We will continue to disrupt the networks that enable Russia’s acquisition and use of these advanced weapons.”

Today’s action was taken pursuant to Executive Order (E.O.) 14024, which targets Russia’s harmful foreign activities.

RUSSIAN DRONE PRODUCTION IN THE PRC

U.S.-designated Joint Stock Company Izhevsk Electromechanical Plant Kupol (AO IEMZ Kupol), a subsidiary of U.S.-designated Russian state-owned weapons company JSC Aeropspace Defense Concern Almaz-Antey (Almaz-Antey), coordinates the production of the Garpiya series UAVs at factories in China before transferring the weapons to Russia. Xiamen Limbach Aircraft Engine Co., Ltd. (Limbach), based in the PRC, produces the L550E engine for implementation into the Garpiya. Redlepus Vector Industry Shenzhen Co Ltd (Redlepus), which also operates out of the PRC, has worked in collaboration with U.S.-designated Russian defense firm TSK Vektor OOO (TSK Vektor), which serves as an intermediary between AO IEMZ Kupol and the PRC-based suppliers for Russia’s Garpiya project. In addition, TSK Vektor has imported numerous shipments from Redlepus into Russia since the beginning of 2024, including electronic and mechanical components with UAV applications such as aircraft engines, parts of automatic data processing machines, and electrical components. Redlepus was previously involved in an effort with AO IEMZ Kupol and TSK Vektor to establish a joint drone research and production center. 

Russian national Artem Mikhailovich Yamshchikov (Yamshchikov) is the General Director and beneficial owner of TSK Vektor, which assists with procurement on behalf of AO IEMZ Kupol and Almaz-Antey in the development and production effort of one-way attack UAVs. Yamshikov has directed procurement activities on behalf of TSK Vektor, including the procurement of sensitive UAV components for the Garpiya series one-way attack UAV program. Yamshikov also directs and owns Russia-based Limited Liability Company Trading House Vector (TD Vector).

AO IEMZ Kupol, a leading Russian defense firm that produces anti-aircraft defense equipment used by Russia’s Ministry of Defense, was designated pursuant to E.O. 14024 on December 12, 2023, for operating or having operated in the defense and related materiel sector of the Russian Federation economy. TSK Vektor was designated pursuant to E.O. 14024 on December 12, 2023, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of AO IEMZ Kupol. AO IEMZ Kupol’s parent company, Almaz-Antey, was designated pursuant to E.O. 13661 on July 16, 2014 and pursuant to E.O. 14024 on January 26, 2023.

Redlepus, Limbach, and Yamschikov are being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. TD Vector is being designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Yamschikov.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.  These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as from engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. 

In addition, foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base run the risk of being sanctioned by OFAC. For additional guidance, please see the updated OFAC advisory, “Updated Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base,” as well as OFAC Frequently Asked Questions (FAQs) 1146-1157.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Any persons included on the SDN List pursuant to E.O. 14024 may be subject to additional export restrictions administered by the Department of Commerce, Bureau of Industry and Security (BIS).

For identifying information on the individuals and entities sanctioned today, click here. 

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Treasury’s allocation of over $500 million in SSBCI funding to Tribal Nations is the largest federal investment in Indian Country small businesses in history.

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) announced reaching a major milestone with the approval of over $500 million in State Small Business Credit Initiative (SSBCI) Capital Program applications from Tribal Nations. This milestone was reached with the approval of up to $86.9 million for the Cherokee Nation and the approval of eight additional applications worth an additional $15 million. Through this $500 million investment, Tribes are expected to leverage as much as $5 billion in additional financing to support Native entrepreneurs and small businesses.  

To date, Treasury has approved applications for up to $523 million in Tribal Capital Program allocations, representing 235 Tribal Nations. The SSBCI investment in Tribal entrepreneurs and economies supports Tribal Nations in providing critical access to capital, crowding in private lending and investment.  

Today, Treasury is also announcing the approval of 14 Tribal government SSBCI Technical Assistance (TA) Grant Program awards totaling $3.9 million. This now brings the total TA Grant Program Tribal awards to 15 Tribal governments totaling $4 million. The SSBCI TA Grant Program supports programs that provide legal, accounting, and financial advisory services to qualifying small businesses. In addition to today’s announcement, Treasury has announced the approvals of SSBCI TA Grant Program awards allocated by formula to states, the District of Columbia, territories, and Tribal governments, representing nearly $149 million for 62 jurisdictions. Treasury anticipates additional approvals of applications to follow. See the full list of announced program approvals here.     

“I am proud to announce the approval of over $500 million in funding for Native American small businesses. These investments increase access to capital and expand economic opportunity in tribal communities. With this funding, these entrepreneurs will be able to access the technical assistance they need in order to hire more employees, grow their businesses, and advance innovation, which – in turn – grows our economy as a whole,” said Vice President Kamala Harris. 

“Today’s announcement demonstrates the Biden-Harris Administration’s historic commitment to investing in the economies of Tribal Nations and creating opportunities for their citizens,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Small businesses are critical to long-term economic development, and today’s announcement will help thousands of entrepreneurs access capital that will help them expand and grow.” 

“We often say that small businesses are the lifeblood of the local economy in Cherokee communities across the reservation, and that is certainly true today. Through this historic partnership with the U.S. Treasury, Cherokee Nation will partner with financial institutions to provide Native-owned businesses access to capital for the start-up or expansion,” said Cherokee Nation Principal Chief Chuck Hoskin Jr. “These funds will help to create community-based jobs and needed capital for businesses that are in all stages of their life cycle. Together with the additional services and resources we are able to provide Cherokee citizens, I know this historic funding is going to bring a wave of new opportunities across the Cherokee Nation Reservation.” 

“Investments in entrepreneurship and small businesses are critical to a healthy economy,” said Chickasaw Nation Governor Bill Anoatubby. “We look forward to how this award and partnership with the State Small Business Credit Initiative will greatly benefit Chickasaw business owners and other small business owners where Chickasaw citizens reside. We intend to utilize this award to expand these small businesses’ access to capital, as well as vital connections to legal, accounting and financial advisory services.” 

“Small businesses are the heartbeat of our economy, and Tribal businesses are vital employers on reservations and in their surrounding communities,”  said U.S. Congresswoman Sharice Davids, Co-Chair of the Congressional Native American Caucus. “Providing easier access to capital through resources like the SSBCI Program will empower Native entrepreneurs for generations to come.” 

“Last Congress, Democrats passed the American Rescue Plan to support the SSBCI program. Now we have the largest single federal investment in Indian Country small businesses in history. Investing in Native American-owned small businesses creates local jobs and builds family wealth. Indeed, economic sovereignty is key to tribal sovereignty,” said U.S. Congresswoman Teresa Leger Fernández. “In New Mexico, the Navajo Nation and the Pueblos of Zuni and Taos are already benefiting from this program. It’s great to see the Cherokee and Chickasaw Nations will benefit as well. I look forward to what this funding will do for tribes across the country.” 

With today’s announcement of $86.9 million to Cherokee Nation, the Tribe will be able to utilize the Tribal flexibilities in the SSBCI program to serve small businesses on the Cherokee Nation’s reservation, which covers 14 counties in Oklahoma, with capital and technical assistance. This includes through a loan participation program which will connect local businesses with financial institutions and help deploy capital through the Tribe’s community development financial institution. 

Treasury also recently announced two competitive technical assistance awards through the SSBCI Investing in America Small Business Opportunity Program (SBOP) for the Cherokee and Chickasaw Nations.  

Through their $2 million SBOP award, Cherokee Nation Commerce Services will connect underserved small businesses in the 14 counties of the Cherokee Nation in Oklahoma with industry experts and foster collaboration with local financial institutions. This will be done through specialized business coaching in collaboration with Native American-owned The Strategy Group, LLC. The intended results of the program will be quality jobs for Tribal citizens, support for entrepreneurs and small business employees, multiplier impacts along the supply chain, and rural healthcare improvements through entrepreneurial innovation.   

Chickasaw Nation will use their $2 million SBOP award to support businesses located in the Chickasaw Nation treaty territory, an area covering 13 counties, as well as Chickasaw-owned businesses across the U.S., with a focus on agriculture and construction businesses. Partners in this initiative will include Murray State College, the Ardmore Chamber of Commerce, and i2E, Inc. The Chickasaw initiative will be supported by $225,000 in matching funds from Chickasaw Nation Community Development Endeavor, LLC.    

Treasury’s SSBCI program includes over $500 million in allocations to support Tribal small business financing programs and is the largest one-time support for Tribal small businesses. Through Tribal consultation and significant Tribal engagement, Treasury’s SSBCI program and Office of Tribal and Native Affairs implemented application extensions, policy customization, trainings, and direct one-on-one outreach to increase access to this unique opportunity for Tribal Nations.  

The American Rescue Plan reauthorized and expanded SSBCI, which provides nearly $10 billion to support small businesses and empower them to access the capital needed to invest in job-creating opportunities. SSBCI provides funds to states, the District of Columbia, territories, and Tribal governments to promote American entrepreneurship, support small business ownership, and democratize access to capital across the country, including in underserved communities. Through the SSBCI Capital Program, Treasury has approved plans for small business financing programs totaling over $8.7 billion and representing every state and territory, the District of Columbia, and 235 Tribal governments. 

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LONDON – From October 13 to October 15, Deputy Secretary of the Treasury Wally Adeyemo visited London, the United Kingdom, this week to meet with government and private sector counterparts. During engagements, including with Chancellor Rachel Reeves, National Security Advisor Tim Barrow, Bank of England Governor Andrew Bailey, Minister of State Stephen Doughty, and Director General Lindsey Whyte, Deputy Secretary Adeyemo discussed our countries’ economic relationship.  Deputy Secretary Adeyemo discussed both governments’ economic strategies, including through a shared focus on driving strong economic growth and lowers costs through strategic investments in key industries like advanced manufacturing and clean energy. The Deputy Secretary commended the Chancellor and the UK government on a successful investment summit and their work to grow an economy that works for everyone.    

In meetings with Chancellor Reeves, National Security Advisor Barrow, Minister Doughty, and Director General Whyte, Deputy Secretary Adeyemo advanced coordination on geopolitical challenges including the U.S. and UK’s shared steadfast support for Ukraine and ways to further strengthen sanctions. Additionally, the Deputy Secretary highlighted our work to promote stability in the West Bank and efforts to cut off financial flows that enable Iran and its proxies’ destabilizing activities. 

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WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is designating three individuals and four associated companies involved in a Lebanon-based sanctions evasion network that generates millions of dollars in revenue for Hizballah. Hizballah’s finance team is responsible for the establishment and operation of Hizballah commercial projects throughout Lebanon, some of which are financed and facilitated by Iran. OFAC is also designating three individuals involved in the illegal production and trafficking of Captagon that has benefitted Bashar al-Assad’s regime and its allies, including Hizballah. The illegal trade in Captagon, a dangerous, highly addictive amphetamine, has become a billion-dollar illicit enterprise operated by senior members of the Syrian regime.

“Today’s action underscores Hizballah’s destabilizing influence within Lebanon and on the wider region, as the group, its affiliates, and its supporters continue to finance their operations through covert involvement in commercial trade and the illicit trafficking of captagon,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Treasury will continue to expose and disrupt the illicit schemes that underpin Hizballah’s ability to continue its violent attacks.”

Today’s action targeting the Lebanon-based sanctions evasion network generating revenue for Hizballah is being taken pursuant to counterterrorism authority Executive Order (E.O.) 13224, as amended. The U.S. Department of State designated Hizballah as a Specially Designated Global Terrorist group (SDGT) pursuant to E.O. 13224 on October 31, 2001.

Today’s action targeting the illegal production and trafficking of Captagon is being taken pursuant to E.O. 13572 of April 29, 2011, “Blocking Property of Certain Persons With Respect to Human Rights Abuses in Syria”; E.O. 13582 of August 17, 2011, “Blocking Property of the Government of Syria and Prohibiting Certain Transactions With Respect to Syria”; and the Caesar Syrian Civilian Protection Act of 2019 (“Caesar Act”). These actions were also undertaken in support of the objectives of the Illicit Captagon Trafficking Suppression Act.

HIZBALLAH FINANCE OPERATIONS

Treasury has consistently targeted individuals directly or indirectly involved in Hizballah’s finance operations that provide critical revenue for the organization, including Muhammad Qasim al-Bazzal (al-Bazzal) and now-deceased Muhammad Qasir (Qasir), who have managed commercial investments and oil smuggling projects on behalf of Hizballah. On May 15, 2018, OFAC designated Qasir pursuant to E.O. 13224, as amended, for acting for or on behalf of Hizballah as a critical conduit for financial disbursements from Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) to Hizballah. On November 20, 2018, OFAC designated al-Bazzal, an associate of Qasir, pursuant to E.O. 13224 for his support to Hizballah. OFAC has also taken a series of actions targeting Hizballah petroleum smuggling operations, including designations on January 31, 2024 and September 11, 2024 that targeted core elements of a Hizballah and IRGC-QF network that generated hundreds of millions of dollars’ worth of revenue through the sale of Iranian commodities, including petroleum, much of it to the Syrian government. 

In the face of continued pressure from these designations, Hizballah has leveraged sanctions evasion tactics such as transferring ownership of various companies to associates or relatives in an effort to obfuscate Hizballah’s interest in these revenue generating enterprises. Today’s action builds on OFAC’s September 2024 designations of other individuals and entities linked to Hizballah’s corporate network, which siphons revenue to the group, to include additional Hizballah finance officials masquerading as ordinary Lebanese business owners, as well as several of their companies.

KEY FIGURES OF HIZBALLAH FINANCE TEAM

The individuals and companies designated today are part of a network of commercial enterprises owned or controlled by Hizballah. These individuals are linked to Hizballah’s finance team and have registered companies in their own names in order to conceal Hizballah’s interest in the activities. The companies in turn provide Hizballah potentially lucrative business opportunities while also providing them access the formal financial system.

Silvana Atwi (Atwi) works as the secretary of senior finance team official al-Bazzal, and has been linked to other al-Bazzal-associated companies, including Alumix SAL, which was designated by OFAC on September 4, 2019 pursuant to E.O. 13224 for its ties to al-Bazzal, and Concepto Screen SAL Off-shore, which was designated pursuant to E.O. 13224, as amended, for its involvement in facilitating oil deals benefiting the IRGC-QF and Hizballah. Additionally, Atwi is the legal owner of G.M. Farm (formerly known as J.M. PHARM), a company based in Lebanon that was a signatory on Lebanon-based financial projects that Hizballah ran with Iranian involvement. These projects aimed to generate profits for Hizballah.

Haidar Houssam al-Din Abdul Ghaffar (Ghaffar) is a Hizballah finance team official, and the legal owner of Global Tradeline SARL. Global Tradeline SARL is a Lebanese company involved in importing food products to Lebanon, rebranding them, and selling them to generate profit for Hizballah. The company has also imported products for Hizballah activity. In 2022, Global Tradeline SARL made payments to al-Bazzal totaling at least half a million dollars. In addition to Global Tradeline SARL, Ghaffar directs or controls Liban Oui SARL, a dairy production operation within Hizballah’s finance team’s network that generates revenue for Hizballah. 

Houssam Hamadi is a businessman and Hizballah finance team associate. He is also the legal owner of United Sons, a Lebanon-based company. 

Atwi, Ghaffar, Hamadi, and Global Tradeline SARL are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Hizballah. 

GM Farm is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Atwi. Liban Oui is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Ghaffar. United Sons is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Hamadi. 

ILLICIT TRAFFICKING OF CAPTAGON IN SUPPORT OF THE SYRIAN REGIME

Khaldoun Hamieh (Hamieh) has been identified as a Lebanon-based drug trafficker with ties to Hizballah and the OFAC-designated Fourth Division of the Syrian Arab Army (Fourth Division). The Fourth Division was designated pursuant to E.O 13894 on January 12, 2017, for its role in violent repression of civilians in Syria. Hamieh has been identified as controlling Captagon labs in the Syrian city of Sayyida Zainab, in an area that is largely under the control of Iran’s Islamic Revolutionary Guard Corps and Hizballah. Hamieh has worked with border crossing officials at the Lebanon-Syria border to transport Captagon from Lebanon into Jordan. On at least one occasion, Hamieh helped to secure safe passage for a vehicle carrying hundreds of kilograms of Lebanese-made Captagon into Syria. Hamieh, along with members of the Fourth Division, later helped to secure safe passage of the proceeds from the sale of that Captagon to the office of Ghassan Bilal, a key advisor to Maher al-Assad, the brother of Bashar Al-Assad. Ghassan Bilal and Maher Al-Assad were both designated pursuant to the Syrian human rights authority E.O. 13894 on June 17, 2020, in connection with human rights abuses in Syria. 

Hamieh has sold weapons and armored vehicles to Maher al-Assad, and on at least one occasion donated nearly one million dollars to Hizballah. Hamieh’s close relationship with Maher al-Assad, the Fourth Division, Hizballah, and other drug traffickers has allowed him to smuggle Captagon into neighboring Middle Eastern countries from Lebanon and Syria while generating significant revenues for the benefit of the Syrian regime, Hizballah, and himself. 

Syrian national Raji Falhout (Falhout) has been identified as leading a gang that has worked with the Syrian Military Intelligence Directorate and Hizballah to generate revenue from kidnappings and Captagon trafficking.

Adbellatif Hamideh (Hamideh) is a prominent businessman in Syria and the owner of a paper roll factory in Aleppo that has served as a front company for Captagon trafficking. From this factory, Hamideh has shipped Captagon pills worth over $1.5 billion to Europe, concealing the drugs in industrial paper rolls. 

Today’s Captagon-related designations were coordinated closely with the U.S. Drug Enforcement Administration.

Hamieh is being designated for pursuant to E.O. 13582 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the Government of Syria. Hamieh is also being designated pursuant the Caesar Act for being a foreign person that knowingly provides significant financial, material, or technological support to, or knowingly engages in a significant transaction with, the Government of Syria.

Raji Falhout is being designated pursuant to E.O. 13572 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the Syrian Military Intelligence Directorate.

Hamideh is being designated pursuant to E.O. 13582 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the Government of Syria.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above, and of any entities that are owned directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons within the United States, and all U.S.-incorporated entities and their foreign branches. Non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of OFAC regulations may result in civil or criminal penalties.

Non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation.

In addition, non-U.S. financial institutions and other persons that engage in certain transactions or activities with sanctioned entities and individuals may expose themselves to sanctions risk. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under sanctions laws and regulations administered by OFAC. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. For additional information on complying with U.S. sanctions and export control laws, please see the Department of Commerce, Department of the Treasury, and Department of Justice Tri-Seal Compliance Note.

Furthermore, engaging in certain transactions with the individuals designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Pursuant to this authority, OFAC can prohibit or impose strict conditions on opening or maintaining, in the United States, of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducts or facilitates any significant transaction on behalf of a Specially Designated Global Terrorist.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Click here for more information on the individuals and entities designated today.

Additional Treasury resources on countering the financing of terrorism:

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WASHINGTON — Today, in a joint action with Canada, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated the Samidoun Palestinian Prisoner Solidarity Network, or “Samidoun,” a sham charity that serves as an international fundraiser for the Popular Front for the Liberation of Palestine (PFLP) terrorist organization. The PFLP, which was designated as a Foreign Terrorist Organization and a Specially Designated Global Terrorist by the U.S. Department of State in October 1997 and October 2001, respectively, uses Samidoun to maintain fundraising operations in both Europe and North America. Also designated today is Khaled Barakat, a member of the PFLP’s leadership. Together, Samidoun and Barakat play critical roles in external fundraising for the PFLP. Today’s action is being taken pursuant to the counterterrorism authority Executive Order (E.O.) 13224, as amended. 

In a coordinated effort, the Government of Canada has listed Samidoun as a terrorist entity under its Criminal Code, effective Friday, Oct. 11. The listing of an entity is a public means of identifying a group or individual as being associated with terrorism. The Criminal Code prohibits certain actions in relation to terrorist groups, including those related to terrorist financing, such as knowingly dealing with any property that belongs to a terrorist.  

“Organizations like Samidoun masquerade as charitable actors that claim to provide humanitarian support to those in need, yet in reality divert funds for much-needed assistance to support terrorist groups,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States, together with Canada and our like-minded partners, will continue to disrupt those who seek to finance the PFLP, Hamas, and other terrorist organizations.”

“Canada remains committed to working with our key partners and allies, like the United States, to counter terrorist organizations and their fundraisers,” remarked the Honourable Dominic LeBlanc, Canadian Minister of Public Safety, Democratic Institutions and Intergovernmental Affairs. “Today’s joint action with the U.S. sends a strong message that our two nations will not tolerate this type of activity and will do everything in our power to ensure robust measures are in place to address terrorist financing.”

In coordination with Canada, OFAC is targeting a sham fundraiser whose efforts have supported terrorism. When terrorists and terrorist organization abuse the non-profit sector, legitimate organizations have more difficulty securing financial services. This impacts their ability to provide support for basic human needs like food, medicine, and shelter in Gaza and the West Bank. By publicly identifying sham charities, this action reduces the overall risk of the NPO sector and preserves access by legitimate humanitarian organizations to financial services. This action builds on OFAC’s recent action on October 7, 2024, which sought to expose terrorists and terrorist organizations that abuse the non-profit organization sector by raising funds under the guise of charitable work, and was also enabled by key data from Treasury’s Financial Crimes Enforcement Network (FinCEN).

THE POPULAR FRONT FOR THE LIBERATION OF PALESTINE (PFLP)

The PFLP is a terrorist group operating in Gaza and the West Bank. It has been a designated FTO since 1997 and is the second largest Palestine Liberation Organization (PLO) faction despite boycotting PLO meetings since 2018. PFLP remained committed to terrorist activity through its armed apparatus, the Martyr Abu Ali Mustafa Brigades, and the group has been active in the Israel-Hamas conflict, to include participating in the horrific attacks against Israeli civilians on October 7, 2023. PFLP has not held any leadership positions in the PLO since 2016.

PFLP FUNDRAISERS: SAMIDOUN AND BARAKAT

The Samidoun Palestinian Prisoner Solidarity Network (Samidoun), a front organization based in Vancouver, Canada and established by the PFLP, is involved in fundraising for the PFLP. Samidoun serves as a front for the group in countries where the PFLP is declared a terrorist organization. While the organization ostensibly supports Palestinian prisoners and their family members, in practice Samidoun provides financial support to the sanctioned PFLP. In addition to today’s joint action with Canada, Samidoun was also banned by Germany in a separate November 2023 action.

Khaled Barakat (Barakat) is a Canadian citizen and a member of the PFLP and serves as part of the group’s leadership abroad. His fundraising and recruitment efforts support the PFLP’s terrorist activity against Israel. Barakat has previously publicly acknowledged Samidoun’s affiliation with the PFLP, despite direction from PFLP leadership to maintain the confidential nature of the relationship.

Samidoun is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted for or on behalf of, directly or indirectly, the PFLP. Barakat is being designated pursuant to E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, the PFLP.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above, and of any entities that are owned directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons within the United States, and all U.S.-incorporated entities and their foreign branches. Non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of OFAC regulations may result in civil or criminal penalties.

In addition, non-U.S. financial institutions and other persons that engage in certain transactions or activities with sanctioned entities and individuals may expose themselves to sanctions risk or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under sanctions laws and regulations administered by OFAC. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. For additional information on complying with U.S. sanctions and export control laws, please see Department of Commerce, Department of the Treasury, and Department of Justice Tri-Seal Compliance Note.

Furthermore, engaging in certain transactions with the individuals designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Pursuant to this authority, OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Treasury remains committed to enabling the flow of legitimate humanitarian assistance supporting the basic human needs of vulnerable populations, while continuing to deny resources to malicious actors. Accordingly, OFAC sanctions programs contain provisions for legitimate humanitarian support to vulnerable populations, including authorizations for certain humanitarian transactions in support of nongovernmental organizations’ activities. For more information, please review relevant authorizations and guidance on OFAC’s website.

Click here for more information on the persons designated today.

Additional Treasury resources on countering the financing of terrorism and providing humanitarian assistance to the Palestinian people:

 

 

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As Prepared for Delivery

Good morning and thanks for having me. As you all know, the Inflation Reduction Act marks a generational investment in clean energy and our economy. It opens the door to a historic opportunity, but we know we can only take advantage of this opportunity if we implement the law effectively and quickly. Your engagement, support, and leadership over the past two years is helping us do so. 

Already, the IRA tax incentives are leading to unprecedented levels of private sector investment in clean energy and clean energy manufacturing. Over the past two years, companies have announced more than 1,600 clean energy projects representing over $336 billion in investment. 

These investments and the jobs they are creating are going to communities that are too often left out and left behind. Seventy percent have gone to areas where a smaller share of the population is employed. Eighty percent have gone to areas with below-average wages. Eighty six percent have gone to areas with below-average college graduation rates.

Our clean energy economy is also helping drive down costs for American families. Last year, 3.4 million American households and consumers used tax credits to lower their energy bills and save $8.4 billion by taking advantage of heat pumps, rooftop solar, or electric vehicles, and more.

While we are proud of the progress we’ve seen over the past two years, we know we have more to do to unlock the full potential of the IRA. One of the places where this is clearest is with direct pay. 

Direct pay was one of the most complex provisions of the IRA to implement because it deals with many organizations and entities that have never filed a tax return. Thanks to the work of many of you in this room, more than 1,200 organizations have submitted projects or facilities pursuing elective pay, including submissions from more than 500 state and local governments. 

This is a tremendous milestone because these numbers represent hundreds of projects in our communities that will make a difference—from electric vehicle purchases to charging equipment to community solar projects. But we know we can do more, especially with state and local governments. 

Direct pay can help state and local governments get access to funding to launch new projects like solar installations for town halls, charging stations for local government fleets of EVs, and electric school buses. These projects, like the ones we’ve already seen, will save these governments money and will help our transition to a clean energy economy.

To increase state and local government uptake of direct pay, we know they are going to need technical assistance and additional capacity for everything from developing plans to the actual process of filing tax returns. This is especially true for smaller and more economically challenged local governments. 

At Treasury, we are focusing our outreach on 150 of the most economically challenged cities, and we need your help to do more. If we just leave this to local governments across the country to figure out on their own, many will succeed, but some may not. That’s why we’ve asked you all to join us here today to help us figure out what resources these governments need and how we together can provide it. 

Many of your organizations know direct pay inside and out and have been devoted to working with local governments on taking advantage of new opportunities under the IRA. We’re grateful for all you have done so far and for helping us continue to build on the momentum of the past two years. I’m looking forward to seeing what this group comes up with during today’s meeting to help drive forward the uptake of direct pay over the next year and continue to drive the clean energy economy across the country. Thanks again for having me and for being partners in this work.

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