OFAC sanctions financial facilitators and drug traffickers of the Syrian regime

On Tuesday, the US Treasury Department's Office of Foreign Assets Control (OFAC) decided to apply sanctions to eleven Syrian individuals and entities for their support of Bashar al-Assad's regime in Syria through illegal drug trafficking . These measures reflect the Biden administration's ongoing efforts over the past 12 months to more proactively address Syrian drug trafficking. According to the US Treasury Department, the production and trafficking of the amphetamine-like Captagon has become a major source of income for the Assad regime, the Syrian military and paramilitary forces. Captagon is also a huge problem in Saudi Arabia as the Kingdom is among the major consumers of this amphetamine stimulant. In this regard, last March 3 the security authorities in Riyadh seized an enormous quantity of captagon, equal to 4,962,000 pills. This is what was reported by the Saudi newspaper “Al Khaleej”, quoting the spokesperson of the General Directorate for Narcotics Control, Major Muhammad al Nujaidi. The pills were discovered hidden inside a shipment of electrical cables. During the operation, a Syrian citizen was arrested on suspicion of drug smuggling. The value of the cargo is estimated to be over $70 million.

Tuesday's designations include two Syrian nationals involved in a significant incident off Crete in 2018. Among those designated is Taher al-Kayali, a Syrian businessman involved in drug trafficking to Europe via Greece and Italy . Al-Kayali used his company Neptunus LLC to purchase the cargo ship Noka, which was intercepted in 2018 by Greek authorities with Captagon worth about $100 million on board. Neptunus is one of three companies designated Tuesday for facilitating drug trafficking.

The Treasury also sanctioned Mahmoud Abdulilah Al-Dj, another Syrian businessman linked to Operation Noka and involved in trafficking Captagon to Libya. Al-Dj owns the other two Treasury-designated entities: Al-Ta'ir Company and FreeBird Travel and Tourism. According to the Treasury, Al-Dj used Al-Ta'ir to establish a significant smuggling line from Lattakia to Benghazi, generating huge profits for Captagon traffickers.

The Maya Exchange Company (Maya), based in Syria, along with the previously sanctioned Syrian companies Al-Fadel Exchange and Al-Adham Exchange, operated millions of dollars in illicit transactions, foreign currency transfers, and sanctions evasion schemes to benefit the Syrian government. In mid-2023, Maya agreed to assist Alexey Makarov (Makarov), the vice-president of the Sanctioned Russian Financial Corporation Bank (RFC Bank), and Muhammad 'Ali Al-Minala (Al-Minala) of the Central Bank of Syria (CBoS), also sanctioned by the United States, for payments to a Jordanian beneficiary, thus obscuring Russian involvement in the transactions. Al-Minala serves as head of the Foreign Operations and Communications Department within the Directorate of Banking Operations of the CBoS and has collaborated with Makarov on further foreign exchange transfers and sanctions evasion schemes on multiple occasions, most recently analysis for the benefit of the CBoS.

In 2018, the limited liability company “STG Logistic” won and signed a 50-year contract with the Syrian government, granting it rights to 70% of sales revenue from Syrian mines near Palmyra, Syria. STG Logistic shares staff and offices with another OFAC-designated company, and since signing the agreement, STG Logistic's sales to foreign buyers have brought in tens of millions of dollars in revenue for the Syrian government. DWC-LLC (Grains Middle East Trading ), based in the United Arab Emirates and Switzerland, acted as an intermediary for STG Logistic in many shipments of Syrian raw materials to multiple overseas buyers, each shipment worth hundreds of thousands of dollars. Yafi David is the CEO of Grains Middle East Trading.

The latest Captagon-related sanctions were applied by Washington in March 2023 in collaboration with the United Kingdom, involving members of the Assad family, their Lebanese allies and affiliates. In June, the State Department released a strategy that includes working with other state entities to disrupt and dismantle Syrian drug trafficking, with a focus on economic sanctions and other financial tools to target trafficking networks linked to Bashar Assad's regime .

While Tuesday's sanctions represent a step forward, the Biden administration should do more to strangle Assad-linked trafficking networks. The European Union has already imposed broader sanctions on more than a dozen Syrian targets responsible for producing and trafficking Captagon. The Treasury should consider extending existing sanctions in line with those of the EU and act with greater urgency. Furthermore, Washington should develop a methodology to identify and target Captagon precursor flows and money laundering networks linked to Syrian drug trafficking. The use of trade transparency units could be expanded to identify indicators of trade-based money laundering.

In formulating its strategy against Captagon, the Biden administration should carefully consider who benefits from regional drug trafficking. Captagon trading has become a regime-driven business model, involving not only Assad and Syrian forces, but also Hezbollah, Iranian militias and the Islamic Revolutionary Guard Corps, which have been active for years in destabilizing the region thanks to Hamas, Islamic Jihad and the Houthis. Any US strategy must absolutely consider this broader context.