South American region draws terror-financing activity


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Tri-Border Area supports vast money laundering, criminality for Hezbollah, others

Like most major criminal enterprises in the 21st century, the financing of terror has gone global. Hezbollah, for example, now has a major money-laundering operation in the Tri-Border Area of South America—an area that links the nations of Brazil, Argentina, and Paraguay.

In a report funded by the nonprofit Counter Extremism Project and prepared by the risk consultancy Asymmetrica, the Iran-backed Lebanese militia group Hezbollah has taken advantage of a culture of political corruption and lax law enforcement in the region.

According to the report, these conditions draw criminal organizations from around the world. Favored criminal activities include money laundering related to human trafficking, drug trafficking, illegal arms sales, and wildly profitable black-market trading of goods like cigarettes.

The Wall Street Journal  in a review of the new report described the political and economic crises of the tri-border region nations as central to the thriving criminal economy. A free-trade zone established in the 1970s along with weak borders and deeply entrenched political corruption led to brisk business among drug cartels, and that foothold emboldened other criminals and criminal enterprises to move their goods and launder their money in the region.

The Journal quotes co-author Stuart Page as describing the Tri-Border Area as “an epicenter, or a shopping mall, of all the illicit goods and money you need to fund your operations. If you’re wanting to do something on U.S. soil, you’d get the materiel there,” Page said. “You can buy whatever you like, you can find whatever you like, and it’s on the verge of U.S. shores.”

Moreover, with a criminal economy now estimated at $43 billion annually, report co-author Vanessa Neumann asserts in the Journal article that the Tri-Border Area “is well on its way to becoming an economically independent and fully criminalized substate.”

The fact that Hezbollah has a money laundering and terror-financing operation in the Western Hemisphere and very close to the U.S. is due not only to the region’s openness to criminality. A large number of individuals from Lebanon settled in the region during waves of war-related refugee immigration in the 1950s and again in the 1980s. While the vast majority of these resettled Lebanese have no connection whatsoever to Hezbollah, even a small presence within the larger population helped open the door.

The Journal provides a laundry list of other criminal enterprises also entrenched in the area: drug cartels from across South America; and organized crime and mafia groups from Russia, China, Hong Kong, and Korea. While all of these groups represent major crime problems, the terror-financing element of Hezbollah should draw special attention, according to the report.

“Hezbollah’s presence and economic activities in the Tri-Border Area [TBA] must be curtailed and halted,” said CEP Hezbollah expert David Daoud in the report’s press release. “The group currently runs one of the largest cigarette smuggling operation in the Western Hemisphere. By tolerating this illicit activity, we are allowing Hezbollah to continue to operations, and plotting and executing further attacks.”

Stuart Page, one of the report’s authors, asserts that ‘’the TBA has become a regional crime fusion center where corrupt politicians work with drug cartels leading to the creation of a state within a state that benefits a corrupt elite while maintaining a large and efficient money-laundering center for the world’s organized crime and terrorist groups. Currently, an estimated 70 percent of economic activity in this area is on the black market.’’

The report calls on those with economic leverage to push back hard against the criminality in the region. Suggestions including more strident responses from the Financial Action Task Force in its role in standard-setting and reporting on individual countries, and the report urges the International Monetary Fund to require as a condition of the loan that countries that receive bail-out loans to act on improving anti-money laundering and counter-terrorist financing enforcement.

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