July 21, 2024

U.S. Treasury Sanctions Military-Affiliated Companies Fueling Both Sides of the Conflict in Sudan

U.S. Treasury Secretary Janet Yellen arrives at the G-20 Finance Ministers and Central Bank Governors' Meeting during the 2022 Annual Meetings at the International Monetary Fund. IMF Photo/Alison Shelley 13 October 2022 Washington, DC, United States Photo ref: AS221013214.cr3

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced on Thursday the designation of four companies that are generating revenue and contributing to the ongoing conflict in Sudan. The four entities are affiliated with the two opposing forces involved in the conflict: the paramilitary Rapid Support Forces (RSF) and the Sudanese Armed Forces (SAF).

“Through sanctions, we are cutting off key financial flows to both the Rapid Support Forces and the Sudanese Armed Forces, depriving them of resources needed to pay soldiers, rearm, resupply, and wage war in Sudan. The United States stands on the side of civilians against those who perpetrate violence towards the people of Sudan,” Secretary of the Treasury Janet L. Yellen said in a statement.

The designated entities associated with the RSF include AL JUNAID MULTI ACTIVITIES CO LTD and TRADIVE GENERAL TRADING L.L.C. AL JUNAID MULTI ACTIVITIES CO LTD, based in Khartoum, is a Sudanese holding company controlled by RSF Commander Mohamed Hamdan Dagalo and his brother, RSF Deputy Commander Abdul Rahim Dagalo. The company operates 11 subsidiaries, including those involved in the gold mining industry, which has become a vital source of revenue for the Dagalo family and the RSF since the expropriation of the Jebel Amer gold mine in 2017.

TRADIVE GENERAL TRADING L.L.C., based in the UAE, is a front company controlled by RSF Major Algoney Hamdan Dagalo. It has been involved in procuring vehicles for the RSF, some of which may have been retrofitted with machine guns for the RSF’s operations in Sudan.

Entities associated with the SAF that have been designated include DEFENSE INDUSTRIES SYSTEM (DIS) and SUDAN MASTER TECHNOLOGY (SMT). DIS is Sudan’s largest defense enterprise, generating substantial revenue through its subsidiaries involved in various sectors of the country’s economy. The company manufactures small arms, conventional weapons, ammunition, and military vehicles for the SAF. DIS uses a complex system to conceal its ownership of subsidiaries and obtain favorable financial terms from the Sudan Central Bank, resulting in unfair competition with civilian businesses. Additionally, DIS contributes little to Sudan’s revenues due to its opaque ownership structure and tax exemptions. SMT, an arms company, is a shareholder in multiple DIS companies and has a major stake in three companies involved in the production of weapons and vehicles for the SAF.

To ensure that humanitarian assistance reaches Sudanese civilians through legitimate channels while maintaining targeted sanctions against those contributing to the situation in Sudan, OFAC is issuing three general licenses (GLs). These licenses authorize specific activities of international organizations, nongovernmental organizations, and certain transactions related to the provision of water, food, and agricultural and medical items to Sudan.

According to the US Treasury, as a result of today’s action, all property and interests in property of the designated entities within the United States or under the control of U.S. persons are blocked and must be reported to OFAC. Entities that are owned 50 percent or more by one or more blocked persons are also blocked unless authorized by OFAC. The general licenses issued by OFAC allow certain transactions involving water, agricultural, and medical items that would otherwise be prohibited under the sanctions.

OFAC’s sanctions aim to bring about positive behavioral change rather than solely punishing individuals or entities. Information on the process to seek removal from an OFAC list can be found on their website.

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