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Evidence continues to build that overtly authoritarian and ostensibly democratic governments alike are increasingly, purposefully using global standards against illicit finance to target nonprofits, attorneys, reporters and political adversaries they view as a threat to their rule.

Politically motivated terrorism designations, a frequent feature of what analysts have labeled “authoritarian abuse” of the Financial Action Task Force’s 40 technical standards against illicit finance, often trigger debilitating measures against their targets, including surveillance, asset freezes and even imprisonment.

But the impact of unjustly accusing individuals of illicit finance goes further, as their names and other details also end up in third-party databases against which banks around the world screen their clients. As a result, those same banks now risk inadvertently helping authoritarians silence and attack critics not only at home, but also far abroad.

Take the case of Ismail Sezgin, for example.

Sezgin, 40, a director of the Centre for Hizmet Studies, a London-based nonprofit run by followers of Fethullah Gulen, an exiled Turkish Muslim scholar now living in Pennsylvania, was blacklisted as a terrorist financier by Turkey in December 2021 for his alleged membership of the “Fethullah Terrorist Organization,” or FETO/PDY.

The Turkish government has long accused Gulen, a former ally of President Recep Tayyip Erdogan, and his followers of plotting a failed military coup in July 2016, and purged tens of thousands of alleged Gulenists from the police, judiciary, military and other state institutions in the years that followed.

“My assets in Turkey were frozen and seized and my name was put on a blacklist without any due process,” Sezgin told ACAMS moneylaundering.com.

Sezgin, who does not deny participation in the Hizmet movement but claims to have never financially contributed to the organization and already lived in the U.K. at the time of the attempted coup, appeared on BBC News weeks after the event to discuss the Gulenist movement, though not as an official spokesperson.

Still, the interview probably put him on the radar of Erdogan’s government, which blocked his accounts on YouTube, Twitter and Patreon shortly afterwards.

Advocacy group Human Rights Watch and the Office of the U.N. High Commissioner for Human Rights have raised concerns that FETO/PDY-related designations violate due process, alleging that Turkish authorities regularly do not collect specific evidence or even investigate the designees before making them.

World-Check

Sezgin’s financial troubles in Britain started in October 2021, two months before his designation by Turkey, when the U.K. digital payments firm Wise closed his personal account without explanation after he tried to open a business account for the nonprofit he runs.

Two months later, days after Turkey blacklisted him as a terrorist financier, World-Check, which maintains an enormous database of confidential details that thousands of financial institutions across the world use for due diligence, uploaded Sezgin’s name, birthdate, Turkish social security number and other details under the category “non-conviction terror.”

Sezgin’s inclusion on World-Check’s database in effect tagged his payments, loan applications and other activities so as to automatically trigger transactional alerts and potential due-diligence investigations at institutions that subscribe to the company’s services.

In May 2022, Western Union, which Sezgin used for business purposes and to send funds to relatives, blocked several of his transactions and requested additional personal details before eventually informing him that he could no longer use the remitter’s services.

While he has held on to a business account with Barclays and recently managed to open a personal account with NatWest, the 40-year-old has had car lease and mortgage applications turned down by other institutions and constantly fears losing access to financial services.

“Financial institutions, even in the West, have started treating me as if in fact I was a terrorist,” Sezgin said. “The fact that my name has been added to a Turkish terror list destroyed my financial situation, and subsequently my business and my well-being.”

In May 2022, LSEG, which owns World-Check, responded to Sezgin’s complaint that the allegations against him were baseless by marking his entry to note that he rejected them, and that human rights groups had expressed concerns about the political nature of FETO/PDY-related sanctions and Turkey’s alleged lack of due process in targeting suspected Gulenists.

“In the circumstances, little or no weight should be placed on the reported justification for sanctions without separate and independent verification,” Sezgin’s entry on World-Check now reads. The entry further clarifies that Turkey’s restrictions “do not affect his financial and legal status in any other country, especially in countries respecting human rights.”

World-Check also recategorized the 40-year-old from “non-conviction terror” to “individual,” a more generic category populated by politically exposed persons and individuals accused or convicted of involvement in a range of financial crimes other than terrorism.

But the company declined Sezgin’s request to remove the entry, pointing out that regardless of the merit of the allegations against him, financial institutions need to know of his designation by Turkey to stay onside of their legal obligations in the country.

Other designated parties have had more success in challenging their inclusion on third-party due-diligence databases.

A year ago, Refinitiv, which previously owned World-Check, paid Mehmet Baltaci, a local businessman of Turkish descent, £190,000 in damages and legal costs after he accused the firm of libeling him and misusing his data by listing him in the “non-conviction terror” category as an alleged associate of Gulenists pursuant to a baseless designation by Turkey.

World-Check removed the entry, but only after Baltaci lost access to more than 10 bank accounts in three countries.

‘Critical eye’

In two reports published in June, the Royal United Services Institute, a London-based thinktank also known as RUSI, compiled 126 cases of authoritarian abuse of anti-money laundering and combating-the-financing-of-terrorism legislation across 34 countries in the Americas, Eurasia and Africa.

Stephen Reimer, an associate fellow at RUSI who authored the reports, told moneylaundering.com that Sezgin’s case illustrates that the trend poses novel challenges for data providers such as World-Check and financial services companies worldwide.

“It calls into question the reliability of compliance tools like adverse media screening if authoritarian countries can pollute the datasets that the data vendors are selling with politically corrupted data,” Reimer said.

In another case that shows how rapidly Western institutions sometimes act against clients tagged by third-party vendors, Hazim Nada, an American Egyptian oil trader, lost access to several personal and corporate accounts after World-Check identified him as a terrorist pursuant to a series of news articles allegedly planted by the Emirati government.

World-Check deleted the entry after only nine days and apologized to Nada for listing him erroneously, but by that point the oil trader had already lost his business after losing his bank accounts.

Reimer acknowledged that many, if not most, financial institutions probably lack resources to thoroughly assess for themselves whether, for example, a customer’s designation is grounded in fact or baseless.

Separately, the harms done to Sezgin and others like him may pale in comparison to the violent intimidation, lengthy prison sentences and other abuses that activists living under authoritarian regimes now endure, but still constitutes “transnational repression,” said Reimer.

“It’s the autocrats reaching across international borders to frustrate dissidents in the host country, and that’s alarming.”

A spokesperson for current World-Check owner LSEG told moneylaundering.com that the company aggregates data from official sanctions lists, legal and regulatory enforcement actions, government sources, trustworthy publications and other “reliable and reputable” public sources.

“We do not give any opinion or recommendation about any individual or entity named in a World-Check report,” the spokesperson wrote in an email.

Wise declined to comment on Sezgin’s case, while Western Union did not respond to a request for comment by press time.

Contact Koos Couvée at kcouvee@acams.org