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South Africa’s Terror Financing Crisis: The Unchecked Flow of Extremist Funds

south africa hawala terror financing hamas hezbollah

On February 13, 2025, South Africa took a long-overdue step in combating terrorist financing by issuing its first court order under Section 23 of the Protection of Constitutional Democracy Against Terrorist and Related Activities Act (POCDATARA Act). The South Gauteng High Court ordered the freezing of assets linked to two individuals, Abdirizak Mohamed Abdi Jimale and Bashir Abdi Hassan, along with two entities, Almisbaax Pty Ltd (formerly Heeryo Trading Enterprise) and Heeryo Trading Enterprise in Somalia. Authorities found reasonable grounds to believe these individuals and companies had committed, facilitated, or participated in acts of terrorism.

While this action may seem like a decisive move, it raises pressing questions about why South Africa has historically failed to enforce counter-terrorism finance laws. Reports indicate that more than R400 million in suspected terrorist-related transactions flowed through South Africa between 2020 and 2021, positioning the country as a critical financial hub for extremists. This article examines the systemic loopholes that have allowed terrorist financing to flourish in South Africa and why the government’s selective enforcement remains a major concern.

A Hub for Terror Financing in Africa

Despite repeated warnings from international watchdogs, South Africa has consistently struggled with terrorist financing enforcement. The country’s financial regulatory framework has been exploited by extremist groups, particularly those linked to ISIS, who leverage informal networks and weak oversight to move funds across the region.

Jimale, a former Al-Shabaab member who defected to ISIS-Somalia, played a crucial role in laundering at least $400,000 from Somalia through Heeryo Trading Enterprise to ISIS-affiliated groups in South Africa. His counterpart, Bashir Abdi Hassan, operated as a financial facilitator in both Johannesburg and Mogadishu, helping to transfer illicit funds across East African financial networks. These transactions enabled extremist factions in the Democratic Republic of the Congo, Mozambique, Uganda, and Tanzania to sustain their operations and expand their reach.

Financial intelligence authorities claim the asset freeze signals a crackdown on terrorist financing, but many question whether this is simply a symbolic move to avoid further scrutiny from global regulators. South Africa was grey-listed by the Financial Action Task Force (FATF) in 2023 due to deficiencies in addressing financial crime. This sudden enforcement action conveniently aligns with international pressure to demonstrate progress.

The Role of Hawala Networks in Terrorist Financing

One of the primary methods through which terrorist organizations move funds in and out of South Africa is the hawala system. Hawala is an informal money transfer network that relies on trust rather than traditional banking systems, making it difficult for authorities to monitor and regulate.

Here’s how it works: an ISIS financier deposits cash in Mogadishu with a hawala broker. That broker then instructs an associate in Johannesburg to release an equivalent sum to an ISIS-linked operative. These transactions circumvent the formal banking system, allowing large sums of money to move undetected. To legitimize these transactions, shell companies like Heeryo Trading Enterprise process bank transfers that appear legitimate, masking the true origin of the funds.

Hawala networks have long been favored by criminal organizations, arms smugglers, and terrorist groups because they allow money to be transferred quickly and without a digital trail. This system is also deeply ingrained in South Africa’s informal economy, making regulation incredibly difficult. Despite the clear risks, South African authorities have been slow to implement effective controls on these networks. By failing to properly regulate hawala, the government has enabled illicit funds to flow freely into and out of the country, providing extremist groups with the financial resources they need to operate.

The use of hawala in South Africa is not limited to ISIS. Other groups, including Hamas and Hezbollah, have also taken advantage of the weak regulatory environment. Unlike ISIS, these organizations often move funds under the cover of legitimate business transactions, charities, and humanitarian aid efforts. This makes detection even more challenging and requires an advanced level of financial intelligence monitoring that South Africa has yet to implement effectively.

Selective Counterterrorism Enforcement: The ANC’s Ties to Hamas and Hezbollah

While South Africa has taken steps to curb ISIS-linked financial networks, its counterterrorism efforts remain deeply inconsistent. The ruling African National Congress (ANC) has a history of openly supporting Palestinian causes, often hosting Hamas leaders and legitimizing their presence within the country.

In 2023, a Hamas delegation visited South Africa, engaging with ANC officials in what was framed as a diplomatic exchange. However, this relationship has enabled Hamas and Hezbollah operatives to raise funds, organize events, and establish connections within South Africa’s political circles. Unlike ISIS, these groups are not officially designated as terrorist organizations in South Africa, allowing them to operate with impunity.

Hamas and Hezbollah have long utilized South Africa as a strategic base for financial operations, including money laundering, illicit trade, and fundraising efforts. Their supporters in the country have successfully established complex networks of businesses and charities that generate millions in revenue, much of which is funneled back to their organizations. These transactions are often disguised as donations to humanitarian causes, making them difficult to trace.

Despite clear evidence that these groups are engaged in terrorist financing, the South African government has chosen not to act against them. This selective enforcement highlights the political motivations behind the country’s counterterrorism policies. While South Africa is willing to freeze the assets of ISIS-linked operatives to appease international regulators, it continues to turn a blind eye to the activities of Hamas and Hezbollah. This double standard not only undermines the credibility of South Africa’s counterterrorism efforts but also increases the risk of international sanctions or further financial penalties.

Conclusion

South Africa’s financial oversight remains alarmingly weak when it comes to terrorist financing. The recent crackdown on ISIS-linked networks is a step in the right direction, but it does not address the broader issue of extremist financing in the country. The government must implement stronger AML regulations, enforce its counterterrorism laws consistently, and ensure that groups like Hamas and Hezbollah are held to the same standards as ISIS. Until South Africa adopts a uniform and impartial approach to combating terrorist financing, it risks becoming further isolated from the international financial community.