Even those nations that do have the capacity and resources are often failing to enforce the regulations. Despite the increased scrutiny of the United States and its European allies, the innate weaknesses of the international sanctions regime are evident in the cases of both Nada and Nasreddin.
Despite a travel ban and a supposed freeze on assets by European allies, the two men travel freely and have suffered little financial loss.
A U.N. investigation found that some bank accounts had been frozen, but “nothing has been done with respect to any of their other… physical assets.” The report went on to outline how Nada has travelled from Switzerland to Liechtenstein to liquidate his companies that were designated to have their assets frozen, had himself appointed liquidator, and, still in control of assets, used them to set up new companies that were not designated.
Nasreddin’s companies — from a luxury hotel in Italy to cookie factories in Nigeria — also continue to operate with little impediment. 80 This led the U.N investigators to conclude that the “Nada and Nasreddin examples reflect continued serious weaknesses regarding the control of business activities and assets other than bank accounts.”
One of the primary weaknesses is that any jointly held company cannot be designated unless all of the owners of the company are also designated. This means that any person designated as a terrorist financier can simply register a company with a non-designated individual such as a family member, and escape the sanctions.
Authorities argue that it is impossible to determine what assets of a jointly held company should be frozen. While that may be true, and the rights of unaffiliated persons must be protected, there has been little creative thinking to deal with the most obvious loophole in the process.
The same weakness in the sanctions regime is evident with charities. While dozens of charities have been designated for their support of al Qaeda and other organizations, many were never closed down by the host country. Many more were simply closed and opened a short time later at the same address but under a different name. These include some of the best-known charities such as the al Rashid Trust and branches of al Haramain.
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