By Emanuele Ottolenghi and Jose Luis Stein
December 14, 2018
Almost halfway through his term, U.S. President Donald Trump’s administration has yet to launch a coordinated assault against Hezbollah’s terrorist finance networks in the Western Hemisphere, especially in the Tri-Border Area of Argentina, Brazil, and Paraguay, the Iran-backed terrorist group’s most active financial hub in the region. That may be about to change, though.
All three of the bordering countries have elected leaders who have forcefully denounced the scourge of transnational organized crime and pledged to enhance cooperation among themselves and with Washington. This past January, the Trump administration established the Hezbollah Financing and Narcoterrorism Team, an interagency task force focused on the threat. Now is the time for Washington and its re-energized partners to launch a coordinated assault against Hezbollah’s networks and its enablers, which could have serious repercussions for the group’s ability to fundraise at the very same time that its Iranian patron faces crushing pressure from the return of U.S. sanctions.
It has been more than a decade since the U.S. Department of the Treasury sanctioned a Hezbollah operative in the Tri-Border Area. In late 2017 and early 2018, though, the Trump administration appeared to signal it would revisit this issue.
In December 2017, a Politico investigation charged that President Barack Obama’s administration, in an effort to facilitate nuclear negotiations with Iran, had gone soft on Hezbollah in order to facilitate nuclear negotiations with Iran. Specifically, the investigation alleged that the Obama administration deliberately derailed Project Cassandra, an ambitious effort by the U.S. Drug Enforcement Administration to stop Hezbollah from trafficking narcotics into the United States and Europe. Days after the publication of the exposé, then-Attorney General Jeff Sessions ordered a review of Obama’s handling of Project Cassandra. On Jan. 11, Sessions announced the establishment of the Hezbollah Financing and Narcoterrorism Team.
Yet no concrete action against Latin American targets has followed. To be sure, Treasury did sanction the overseas networks linked to one of Hezbollah’s key Lebanese financiers, Adham Tabaja. So far this year, the Treasury has designated 31 individuals and entities, including four on the same day in November that the State Department put sanctions on Jawad Nasrallah, the son of Hezbollah’s leader, Hassan Nasrallah. However, Washington did not impose sanctions on any targets linked to Hezbollah’s Latin American operational hubs, in particular the Tri-Border Area.
In October, however, the administration began to signal an increased readiness for action. Sessions announced the formation of a Transnational Organized Crime Task Force that would confront Hezbollah and four other major organized crime threats. Trump also signed the Hezbollah International Financing Prevention Amendments Act of 2018 into law. And in an address at the American Enterprise Institute that month, Assistant Secretary of the Treasury for Terrorist Financing Marshall Billingslea noted that Hezbollah has “a very robust presence” in the Tri-Border Area. The terrorist group, he said, “has a deep and substantial footprint in the Western Hemisphere, and they use the cover of seemingly legitimate businesses” to conduct its illicit financial activities.
These steps suggest that 2019 could be the year when Hezbollah’s operations in the Americas begin to unravel.
Three factors likely explain the administration’s new emphasis. First, Hezbollah’s revenue stream from illicit networks in the Americas is significantly growing, both because Hezbollah’s financial needs have expanded and because U.S. sanctions are cutting into Iran’s disposable income, which previously funded the group. Second, Hezbollah funnels much of its Latin American proceeds from illicit activities through the U.S. financial system, threatening its integrity.
Third, Argentina, Paraguay, and Brazil are readier than ever to work toward stamping out transnational crime in their midst. This convergence, aided by the election of new presidents in Argentina in 2015, Paraguay this April, and Brazil this October, has created a more constructive environment for joint action, especially after new Brazilian president Jair Bolsonaro takes office in January.
There are clear indications that this trio of presidents plans to follow through on prior pledges. In July, Argentina’s Financial Intelligence Unit, in cooperation with its U.S. counterpart, the Financial Crimes Enforcement Network, initiated an administrative assets freeze against 14 Lebanese nationals and Tri-Border Area residents whom it accused of using Argentina’s casinos to launder money and funnel it to Hezbollah. Additionally, Argentina’s Ministry of Justice and Human Rights has been developing a terrorist financing and proliferation financing national risk assessment, one of the first of its kind in the region.
Paraguay has followed suit. Shortly after its new president, Mario Abdo Benítez, took his oath on Aug. 15, Paraguayan prosecutor Irma Llano issued an arrest warrant for Assad Ahmad Barakat, a Hezbollah financier sanctioned by the United States in 2004, who is also part of the network the Argentines had targeted in July. Within days, Llano issued another warrant, this time for Sobhi Mahmoud Fayad, a second Hezbollah financier who has come under U.S. sanctions. In September, Brazilian police arrested Barakat on their side of the border, where he remains in detention while awaiting extradition to Paraguay.