South Africa: Fertile ground for financing terrorism

South Africa has become fertile ground for the expansion of ISIS amid several incentives for its spread, including recruitment, the use of extremist and racist ideas, the existence of divisions between Sunni and Shiite groups, the spread of religious fanaticism within the Islamic community in the country, as well as the ease of transferring money to it without any obstacles.

ISIS financing center

South Africa has never been actively involved in terrorist attacks, but it is nonetheless considered a funding center for ISIS and other extremist organizations.

According to AFP, South Africa is open land for financiers to collect money and transfer it to the hands of terrorists.

In 2022, the US government imposed sanctions on a number of South African citizens accused of belonging to an ISIS terrorist cell, and Washington said that the group facilitated the transfer of funds to ISIS branches across Africa.

Illegal financial activities

The first signs of a problem appeared in March 2023, when the Financial Action Task Force (FATF), a Paris-based global organization that monitors illicit money transfers and aims to combat money laundering and terrorist financing, put South Africa on its gray list that identifies gaps in monitoring and stopping illicit financial activities.

Various circumstances, including a permissive financial system, porous borders, corruption and widespread crime have made South Africa fertile ground for terrorism.

Much of the money comes through organized crime gangs that collect money by smuggling drugs and precious metals, in addition to kidnapping for ransom. Extortion operations are also spread through fake accounts on dating sites, with the aim of trapping victims.

Kidnapping cases have doubled, recording 4,000 cases between July and September of 2022, compared to the previous three months, according to police statistics.

According to an investigation conducted by the South African weekly newspaper The Sunday Times, 6.3 billion rand (approximately $342 million) was transferred from South Africa to Kenya, Somalia, Nigeria and Bangladesh via telephone transfers using approximately 57,000 unregistered SIM cards between 2020 and 2021. The “hawala” system is also used to send money, which is an informal payment system based on trust and is much more difficult to monitor than bank transfers. Some of the money sent abroad is really intended to help relatives, and the exact amounts collected by terrorists are not known.

Financing center

According to the South African newspaper, internal ISIS documents show that of the funds collected on the continent, the organization’s branch in Somalia keeps 50%, while 25% is shared between the cells in Mozambique and the Democratic Republic of the Congo, and the rest goes to the organization’s center.

One of the suspects on the US list, Farhad Hoomer, 47 years old, based in Durban, South Africa, is the leader of one of the cells. Sanctions were imposed on him in 2022 for his increasingly pivotal role in facilitating the transfer of funds from the top of the ISIS pyramid in Iraq and Syria to branches across Africa.

Hoomer denied that he was the leader of an extremist organization cell and told AFP that he was surprised by the sanctions, adding, “I am waiting for proof.”

South Africa is now intensifying its efforts to exit the FATF gray list, with several pieces of legislation being fast-tracked in the parliament in recent months, particularly legislation relating to combating money laundering and terrorist financing.

On May 19, Security Minister Khumbudzo Ntshavheni told lawmakers that her office - along with other bodies - will continue to develop and implement measures to ensure that South African territory is not used to plan, facilitate and carry out terrorist acts, or to obtain, transfer, store and use funds to support terrorism.

Center for terrorism

Samar Abdullah, a researcher of African affairs, said that the West considers South Africa a global center of terrorism. In 2022, the American government imposed sanctions on a number of South African citizens on charges of belonging to an ISIS cell, as this group facilitated the process of transferring money to the organization’s branches in a number of African countries.

Abdullah confirmed in a special statement to the Reference that the accusations against South Africa also include technical, financial and material support for terrorist groups, adding that South Africa’s association with terrorism is due to several reasons, including a lax financial system in which terrorists find a safe haven and borders that are easy to penetrate, as well as corruption and the spread of organized crime in the country.