Money Laundering on the U.S. Doorstep

 In Anti-Money Laundering

              On May 8th, United States President Donald Trump announced his decision to pull the U.S. from the ever-controversial 2015 nuclear deal with Iran, a deal that he had long regarded as “defective at its core.” Many had viewed the nuclear deal, more appropriately termed the Joint Comprehensive Plan of Action (JCPOA), as far too one-sided on behalf of Iran, a country that was believed to have used the economic boost that came with the lifting of sanctions to continue to destabilize the Middle East and support terrorist organizations in the region. The move has garnered mixed reviews in the weeks since the proclamation was made however, as Trump has been met with severe backlash from critics primarily in the western hemisphere, the left-wing media, and even some of his international counterparts. At the same time, the U.S. has continued to receive praise from the leaders of Saudi Arabia, Israel, and other countries in close proximity to Iran for exiting the flawed agreement. While we will ultimately have to wait and see how the decision pans out, the North American country was once again the subject of international headlines last week as its first batch of sanctions was imposed as part of a continuation of its policy to exit the deal.

On Wednesday, a joint action between the U.S., Saudi Arabia, Qatar, and four other parties culminated in the sanctioning of Hassan Nasrallah, the leader of Hezbollah – a Lebanese militant group supported by Iran and previously designated as a terrorist organization by the United States, United Kingdom, France and many other world powers. In an additional designation separate from the reinstated sanctions, the U.S. Treasury Department also imposed sanctions on the head of Iran’s central bank and multiple others over their alleged roles in providing millions of dollars in funding to Hezbollah. Altogether, Valiollah Seif and three other entities – central bank official Ali Tarzali, al-Bilad Islamic Bank in Iraq, and the bank’s chairman, Aras Habib – were also included on the updated U.S. global terrorism list. While these positive developments are a step in the right direction for the promotion of greater international security via improved cross-border collaboration, Hezbollah has now emerged as a major presence in a territory that lies dangerously close to the United States.

The Wall Street Journal article “Hezbollah Said to Be Laundering Money in South American Tri-Border Region” cited in BSA News Now on Wednesday, May 16th, 2018, describes how the Latin American free-trade zone has developed into an international shopping center for illicit weapons and other goods as well as a fundraising point for unlawful operations, one that poses a significant risk to the state of national security in the United States. While the widespread illicit activities found in the “tri-border” region (composed of Brazil, Argentina, and Paraguay) of South America are not novel to U.S. authorities, this activity has intensified in wake of the severe economic and political turbulence that has been seen in this zone of late. Acclaimed writer Ian Talley writes that “Venezuela’s political crisis and Argentina’s inflation, together with entrenched corruption and lax law enforcement, are helping fuel an illicit economy estimated to be worth $43 billion a year, far surpassing Paraguay’s entire gross domestic product” according to reports (Talley, 2018). As a result, criminal organizations and terror groups have migrated from virtually every region of the world to Latin America and the Caribbean due to the relative ease with which they can continue laundering their illicit funds, in addition to their ability to delve into other profitable ventures such as drug and human trafficking, as well as the black market sales of highly-coveted weapons. While this area has now arguably become the easiest location in the world to launder money, the most troublesome aspect of these progressions is that this problem did not develop overnight. The article notes that this activity began over 40 years ago following the establishment of a free-trade zone in 1970, one that was exploited by regional drug cartels that “took advantage of corrupt government officials and weak border security to move their goods and launder cash around the region”, effectively institutionalizing corruption in the region in the years that followed (Talley, 2018).

Today this precinct entertains cartel members from some of the most notoriously corrupt countries in the world, a list that includes the likes of Colombia, Mexico, Brazil, and China. In many cases, these bodies work alongside and often deal directly with the sizable Lebanese merchant community found in the region, with a significant portion of the funds accrued through the sale of Lebanese-manufactured goods directly supporting Hezbollah. Talley details findings from Argentinian prosecutors who discovered “Lebanese individuals in the tri-border region provided support for the bombings of the Israeli embassy and a Jewish cultural center in Buenos Aires in the 1990s that killed scores of people. More recently, many of the individuals sanctioned by the U.S. for financing Hezbollah from the region are still operating there, according to U.S.-based analysts and recent court cases” (Talley, 2018). The U.S. and the governments of several Central and South American nations that have acknowledged the severity of the issues at hand have worked to limit the illicit activities occurring in the region, but have thus far had little success. The U.S. has gone as far as to develop a task force charged with analyzing and targeting Hezbollah’s financing operations as they pertain to this territory, with Paraguay and Argentina now welcoming U.S. Drug Enforcement Administration (DEA) agents to their country’s to help solve the problem. A recent report published by political risk consultancy Asymmetrica notes that these efforts may not be enough however, calling for a more “comprehensive solution, including stronger involvement of the standard-setting body, the Financial Action Task Force, and leveraging the power of the International Monetary Fund” to truly make a difference (Talley, 2018). Clearly something has to give in this regard before more potent threats wash up directly onto U.S. shores.

 

Stay current with AML news.  Register for daily updates.

Recent Posts
Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text.

Start typing and press Enter to search