Sayf Abdulrab Salem al-Hayashi: AQAP’s Financial Conduit to the Yemen-Somalia Weapons Trade

Sayf Abdulrab Salem al-Hayashi: AQAP’s Financial Conduit to the Yemen-Somalia Weapons Trade

On September 17, the Global Initiative Against Transnational Crime released a public report detailing the use of hawala remittance exchanges in the illicit trade in small arms and light weapons between Yemen and Somalia. [1] The report identified nearly $3.7 million in financial transactions executed between 2014 and 2020 by a network of six prominent Yemeni and Somali weapons dealers. It also identified Sayf Abdulrab Salem al-Hayashi, a U.S.-designated weapons trafficker linked to both al-Qaeda in the Arabian Peninsula (AQAP) and Yemen’s Islamic State affiliate, as a key figure in this illicit financial ecosystem. Al-Hayashi reportedly appeared in approximately $1.2 million worth of hawala transactions between October 2016 and April 2020. Those transactions revealed previously undisclosed methods and tactics used to illicitly finance and supply illegal weapons to Somalia-based armed groups (GI-TOC, September 17).

Al-Hayashi was first designated as an AQAP and Islamic State weapons trafficker and financier on October 25, 2017 as part of a collective sanctioning action led by the United States and the Gulf-based Terrorist Financial Targeting Center (TFTC) – a sanctions targeting taskforce established by the governments of Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Kuwait and Oman (U.S. Treasury Department, October 25, 2017). The 2017 designation described al-Hayashi as a Yemen-based weapons dealer who used money exchange businesses in Shabwah and Hadramout to illicitly purchase, trade and distribute contraband, narcotics and weapons to Mukalla, Sana’a and other areas in Yemen. He reportedly traveled across the country, meeting with senior AQAP leaders whose finances he managed. But while much of his publicly-exposed profile was limited to Yemen, the GI-TOC report revealed extensive ties between al-Hayashi and a network of illicit arms traders in both Yemen and Somalia.

Al-Hayashi’s weapons trafficking activities date back to 1994, when he reportedly shifted operations from al-Bayda to Shabwa. He supposedly established a money exchange business alongside two food stores identified as “al-Khayr Supermarket” and located in Azzan, in the central Shabwa governorate, and in Fuwwah, in the eastern Hadramawt governorate (U.S. Treasury Department, October 25, 2017). Both locations served as weapons smuggling hubs and at least one of them – the Hadramawt-based facility – was raided by the UAE-funded Hadramawt Elite Forces in 2016 (Yemen Voice, October 26, 2017). It also seemingly provided money exchange services through the Cooperative & Agricultural Credit Bank (CAC) Bank of Yemen. [2] These links to money exchange services appeared instrumental to the broader weapons trafficking enterprise revealed in the GI-TOC report.

Al-Hayashi reportedly worked in concert with a Somalia-based weapons trafficking network executing approximately $1.2 million in hawala transactions directly and indirectly through a proxy financial courier (GI-TOC, September 17). The majority of his transactions involved a Somalia-based trafficker identified as Abdirahman Mohammed Omar (a.k.a. “Dhofaye”). Dhofaye was first identified in 2017 as a weapons trafficker by U.N. embargo monitors in Somalia. His trafficking activities included supplying illicit weapons to northeastern Somalia’s semi-autonomous Puntland region, where both Islamic State and al-Shabaab have a fractious, competing operational presence (U.N. Panel of Experts Report, 2017). U.N. investigators in 2017 found that Dhofaye was implicated in the illicit transfers of AK-pattern rifles and PKM machine guns to the Puntland region from the seat of al-Hayashi’s smuggling operations in both Shawba and Hadramawt (U.N. Panel of Experts Report, 2017).

Analysis of both al-Hayashi and Dhofaye’s communication and financial transaction records confirmed direct interactions between the two from 2016 and 2020. After his 2017 sanctions designation, Al-Hayashi’s financial transactions with the Somalia-based network of weapons traffickers continued, but this time through a proxy identified as Bashir Naaji Abdullahi Shujac. Some of these transactions were high dollar value transfers of over $10,000 in single transactions, and involved at least two hawala remittance providers, namely Amal and Iftin Express. And while Somali remittance providers are subject to financial due diligence requirements that mandate screening for suspicious transactions involving sanctioned customers, al-Hayashi seemingly evaded these controls and continued to operate (GI-TOC, September 17).

GI-TOC investigators found that al-Hayashi used at least eight different phone numbers and at least six different aliases to execute financial transactions between Yemen and Somalia. And while the 2017 sanctions designation revealed six of his aliases, he appeared to simply pivot to an alternate set of identities to evade detection (GI-TOC, September 17). The aliases used in the Somali remittance transactions included alternate renderings of the aliases identified back in 2017. This revealed stark vulnerabilities in the traditional transaction-screening mechanism, which is easily deceived and potentially defeated by moderate changes in naming and spelling conventions as displayed below.

Sayf Abdulrab Salem al-Hayashi (Aliases identified by the U.S. Office of Foreign Assets Control (OFAC))	Sayf Abdulrab Salem al-Hayashi (Aliases identified in Somali Remittance transaction receipts)
Sayf al-Baydani	Abdiraba Abdirab Salim
Sayf Husayn ‘Abd al-Rabb al-Baydani	Abdiraba Abdirab Salim al-Baydaani
Saif al-Bhadani	Abdiraba Abdirab Salim al-Baydanni
Sayf al-Bidhani	Abdiraba Abdirab Salim Baydaani
Sayf ‘Abd-al-Rab Salim	Abdirabi Abdirabi Salim al-Baydani
Sayf ‘Abd-al-wali ‘Abd-al-rub	Abdi Rabh Abdi Rabi Saalim Beydaaani

Al-Hayashi’s financial activity in the post-sanctions era suggests that his financial facilitation on behalf of armed groups in both Yemen and Somalia is continuous and ongoing. It also exposes substantial flaws in the hawala remittance system and the prevailing vulnerabilities of the Somali financial system to terrorist and militant financing. These failures are abetted by poor administrative capacity and limited surveillance and control of Somalia’s domestic financial sector. These flaws enable militant financiers like al-Hayashi—and others of his ilk—to profit and exploit an already-vibrant trade in illicit weapons in Yemen in order to supply armed groups in Somalia.

Al-Hayashi’s use of the hawala remittance system reveals substantial flaws in ongoing efforts to disrupt illicit financial flows to militant groups in Yemen and Somalia. Both conflicts involve a variety of competing militant and terrorist groups, each seeking to finance militant operations and illicit weapons purchases through the financial ecosystem exploited by Al-Hayashi. And while hawala systems provide essential financial services to vulnerable citizens in both countries, they remain vulnerable to criminal and terror-related infiltration. The full scale of Al-Hayashi’s illicit financial activities is difficult to discern. But the vulnerabilities he exploited exist elsewhere in the hawala industry more broadly. These flaws are likely exploited by other terror financiers and are an essential – though sometimes underappreciated – component of the terror financing ecosystem that currently sustains both al-Qaeda and Islamic State in Yemen and Somalia. 

Notes  

[1] The hawala money transfer system is an informal remittance service that often operates outside of, or in parallel to, traditional banking systems. The hawala system is a trust-based service that allows participants to access, receive, and transfer money without the physical movement of cash. Participants send money, sometimes across borders, by paying a small transaction fee to a network of providers that receives deposits and facilitates equivalent withdrawals by the receiving party. For additional details on the hawala system and its money laundering and terrorism financing risks, see: The Role of hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, Financial Action Task Force (FATF), October 2013, https://www.fatf-gafi.org/media/fatf/documents/reports/Role-of-hawala-and-similar-in-ml-tf.pdf

[2] See CAC Bank Electronic Service Locations, #100: https://www.cacbank.com.ye/ar-YE/Contents/SubPage/CAC-POS