Since the fall of the Soviet Union, the United States has taken the role of sole guarantor of peace and provider of global security. The recent Afghanistan exit marks a paradigm shift in the foreign policy of the United States. How will this new Pax Americana impact the sanctions regime?
Two big empires found in Afghanistan a graveyard of dishonour: the Soviet Union and the United State. While the Soviets aimed to build socialism in the region, the US tried to build a nation. Both failed and in the case of the Soviet Union, it triggered the disintegration of the country. The Afghanistan exit marks the end of the US nation-building strategy. Since the end of the Cold war, the nation-building doctrine has been the main driver of US supremacy on the geopolitical scene. The American global military presence is the power behind the US dollar’s status as a leading currency.The US global military power solely supports the extraterritoriality laws. All sanctions regimes implemented by both governments and financial institutions are based upon one narrative: breaching or attempting to breach the US rules is not good for business domestically and globally.
President Biden underlined that “this decision about Afghanistan is not just about Afghanistan. It’s about ending an era of major military operations to remake other countries”. Remaking other countries is quintessential not only for global security but also for tackling transnational financial crime.
The Afghanistan exit pointed to the weaknesses in the OTAN, and many emerging and third-world countries understood the weak position of western democracies, thereby turning towards Russia and China as guarantors for security. The recent exploits in Western Africa of the Wagner group, Russia's leading private army, speak for themselves.
Extraterritoriality laws and sanctions regimes will be more difficult to maintain at a global level amid the new Pax American. In the long run it will create safe harbours for criminals that will use these unprotected countries as bases for their fraudulent operations. Territorial security and fighting financial crime are interdependent. Vulnerable jurisdictions are more exposed to corruption and rampant economic crime.
The real impact of the new US foreign policy on financial institutions will be non-linear. In the short term, compliance departments may face less pressure in regard to sanctions screening. But in the long term, the financial intelligence units will have real challenges in identifying and tackling the eternal threats. This is because the US will cease to be the sole provider of security and also the primary provider of intelligence.
“he greatest threat to our freedom and prosperity is not al-Qaida, the Taliban, Iran or even China. It's an idea, the idea that we can spend our way out of our problems without tightening our belt and paring down the very bloated government.”
Erik Prince, American entrepreneur ex-Blackwater CEO
Focus: Sentor Solutions Commercial Limited
The FCA issued last week a first supervisory notice against Sentor Solutions Commercial Limited, an Essex based company that failed to pay due regard to the interests of its customers and treat them fairly. Despite claiming to be a consumer credit intermediary Sentor promotes doubtful investments with two other companies: Texmoore Limited and Fabcourt Developments Limited. Sentor is not, or has not been, permitted by the FCA to provide regulated investment activities. Moreover, the FCA has issued warnings against Texmoore and Fabcourt, but Sento continued to market their products despite those alerts. Texmoore and Fabcourt were labelled as scams because they were promoting rogue investments via their online platforms. According to an investigation led by the British journal Mirror, Fabcourt’s accounts are also a work of fiction, apparently showing funds of more than 139 million GBP for the year ending February 28, 2020, while claiming a similar figure for the previous year.
Focus: AstroFXC
The Financial Conduct Authority, Britain’s leading watchdog, issued recently a warning against a Mayfair-based company involved in unauthorised activities.
AstrFXC presents itself as "one of the UK’s leading and fastest-growing schools of trading, as well as having a worldwide student base". The firm has taught over 2,200 students in the last five years, amassed over 3.1 million views on our YouTube market analysis videos. The company claims that its students are successful retail traders, and the reviews are publicly acclaimed.
FCA’s move against this firm comes at a moment when the number of financial education providers is rampant. All social media platforms are filled with ads about learning how to trade and become financially independent. Such education providers expose their students to unforeseen risks. Understanding financial markets cannot be democratised. Not everyone can become a successful FX trader, as not everyone can become a brain surgeon.
Word on the street: Another informant
The war that decimated between 1991 and 1997 the Colombo family, one of the five New York-based mafia organisations, has recently resurged in a Brooklyn court. The Persico and Orena factions had a bloody war that resulted in Carmine Persico keeping its leading position in the syndicate. Persico died in 2019 in a Federal prison where he was detained since the early 1980s. Despite spending almost 50 years in jail, a prominent New York barrister claims that Persico was a high-level informant with the Federal government.
David Schoen, a lawyer representing Orena, the leader of the losing faction delivered the news in a Brooklyn Federal Court filing, including a 1971 law enforcement document identifying Persico as a member of the FBI’s “Top Echelon Informant Program.” The 50-year-old paperwork was revealed through a Freedom of Information lawsuit filed against the Justice Department. Orena hopes that this information will help him to get an early release.