... Even if the FIU somehow fails to place a freeze order on USD accounts belonging to McGill, Twehway, and Cephus, the local banks would have to comply with the US sanctions -- barring the account owners from making any transactions in U.S. dollars, essentially freezing any dollar-denominated assets or liabilities.
When US President Joe Biden decided to tighten the noose around corruption in Liberia, his administration went for the most strategic sanction weapon — targeting the ability of the sanction officials to make any transactions in US dollars, temporarily arresting any dollar-denominated assets held at home and abroad.
Now, three days after the US Treasury Department sanctioned the Minister of State, Nathaniel McGill, the Managing Director of the National Port Authority Bill Twehway, and Solicitor General, Saymah Syrenius Cephus, for public corruption, the Financial Intelligence Unit of Liberia (FIU) has put a “post-no-debit” (PND) order on all local banks hosting the sanctioned officials’ respective US dollar accounts.
The order is a directive from the FIU to local banks essentially blocking all inbound and outbound financial transactions on the sanctioned officials’ bank accounts. It is usually a drastic measure taken to allow for investigation and possible arrest of any suspicious activity on an account.
So far, some local banks have confirmed the receipt of the FIU communications, according to sources. They have one way or another been trying to fall into compliance on their own, knowing the risk of secondary sanctions for knowingly facilitating significant transactions in favor of the sanctioned individuals, the sources added.
However, the PND, issued by the FIU, has a lifespan of only about seven days. The FIU, sources noted, is now seeking a freeze order to block the account before the end of the PND timeframe.
“Banking sanctions are the most impactful measure in the US sanction arsenal. Its potential impact is many,” an FIU insider told the Daily Observer. “We can confirm the FIU PND order but it is weak because, after three to seven days, the bank will no longer be obligated to honor it. The law gives FIU power to freeze [accounts]. A temporary freeze would have been better."
“The PND is basically left for the bank to honor or not. It means FIU has to do it after every three days. So the best is to freeze the account totally as we did to [Senator] Varney Sherman. Other than that, it is automatically out until the FIU uses the word freeze then it will be there for a long time.”
Even if the FIU somehow fails to place a freeze order on USD accounts belonging to McGill, Twehway, and Cephus, the local banks would have to comply with the US sanctions — barring the account owners from making any transactions in U.S. dollars, essentially freezing any dollar-denominated assets or liabilities.
This is due to the fact US sanctions far outweigh the power of any other jurisdiction because of the potential to impose secondary sanctions on any foreign banks that do business with designated persons.
The US Treasury, when announcing the sanctions on the three powerful members of Weah’s inner circle, alluded to this power when it said that “unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”
“It is a two-way street,” the source told the Daily Observer. “Almost all the banks, except for UBA, don’t have branches in America. The second part of it is that all the banks in Liberia do correspondent banking,” the sources said, meaning that to facilitate cross-border financial transactions the local banks have ‘correspondent’ relationships with major American banks that act as a clearinghouse for such international transactions.
“Technically, they will say ‘watch your business line with them. You can’t say don’t do business with them, but watch your business line with them. [The local banks] are not US persons but they do business with US banks. So, the bank has to enhance due diligence. Most banks, when people are sanctioned, they stop relationships with them temporarily until they can exonerate themselves."
“All Liberian banks, because they carried on correspondent banking with US banks, are prohibited from doing business with these people. However, our law calls for where their account is to be used for survival, they can pay hospital bills and food money from there, but in reasonable amounts. They send, for example, receipts or legal papers from the hospital about the bills to the bank, and the bank can honor it.”
This means local banks are now at risk in managing McGill and his sanctioned colleagues’ accounts since all of them (banks) have standing correspondent relationships with US banks.
And would be compelled to comply with the sanctions on the three Weah officials to safeguard their overseas networks and US dollar transactions that are ultimately cleared in the US by passing through the US Clearing House Interbank Payments System (Chips).
The sanctions against McGill, Twehway, and Cephus were announced on August 15 by the Treasury’s Office of Foreign Assets Control (OFAC) — designating the three officials for their involvement in ongoing public corruption in Liberia.
McGill is sanctioned for “receiving bribes from potential investors and accepted kickbacks for steering contracts to companies in which he has an interest, while Twehway is sanctioned for orchestrating the diversion of US$1.5 million in vessel storage fee funds from the NPA into a private account and formed a private company to which he later unilaterally awarded a contract for loading and unloading cargo at the Port of Buchanan, the Treasury added.
Cephus is sanctioned for receiving bribes from people in exchange for having their court cases dropped and has also shielded money launderers and helped clear them through the court system, the Treasury Department said.
These officials are designated pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world,” the Treasury said.
“Through their corruption, these officials have undermined democracy in Liberia for their own personal benefit,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury’s designations today demonstrate that the United States remains committed to holding corrupt actors accountable and to the continued support of the Liberian people.”
Meanwhile, our source reminds the FIU of its responsibility to announce investigations into the finances of those sanctioned since it is their responsibility.
The FIU, sources said, should kick off with the US and see what they don’t know and vice versa… “If FIU asks the US for information, it will be shared with them.”
“It has been more than 48 hours since this thing took place. They should be out there doing something now. 48 hours is enough time for something to start cooking. They have access to information. The very US will share information with them. In the new LACC law, FIU has additional powers to investigate corruption cases.”
Meanwhile, the defenses of McGill, Twehway, and Cephus to withstand the long-term impact of this US sanction is unknown. Not all investments of their ill-gotten wealth stand to be protected. Any US-based non-financial investments (properties, etc) could fall into the sanctions dragnet, so the question of the financial stability of those sanctioned individuals remains up for debate.
Editor’s note: David Menjor contributed to this story.