Leveraging Financial Intelligence to Counter Transnational Threat Networks in the Americas
By Celina B. Realuyo* April 03, 2019Financing is the critical enabler for any organization, even for the Mexican cartels, Central American gangs, and international terrorist groups. Following the money trail helped governments better understand, detect, disrupt, and counter transnational threat networks. Since 2008, the United States and its Latin American allies strengthened their abilities to combat money laundering and terrorist financing. They consciously incorporated the financial instrument of national power into their national security strategies. Military and law enforcement operations against threat financiers, sanctions against terrorists and drug kingpins like El Chapo Guzman and the regime of Nicolás Maduro in Venezuela, and the seizure of assets from the Revolutionary Armed Forces of Colombia (FARC, in Spanish) and Mexican cartels became particularly effective. These measures attack narcotrafficking, dismantle transnational criminal organizations, and expose political corruption scandals across Latin America, such as in Brazil and Guatemala.
Follow the money
Transnational threat networks include terrorists and criminals who consider revenue as both a key objective in case of crime and an essential enabler for terrorism. Financing serves as the lifeblood for these networks and their evil agendas; these networks derive power from their wealth and use it to corrupt and co-opt rivals, facilitators, and/or government and security officials. Financing is indispensable to support and sustain the command and control, personnel, arms, communications, logistics and operations of illicit networks. For this reason, following the money trail and depriving terrorists and criminals of financing can disrupt and disable these threat networks.
Threat finance includes money laundering and terrorism financing. Through money laundering, criminals try to disguise the proceeds, sources, or nature of their illicit activities. Terrorist financing refers to the processing of funds to sponsor or facilitate terrorist activities that could include clean and dirty funding. Money laundering and terrorist financing methods include the banking system, cash couriers, bulk cash smuggling, money services businesses, alternative remittance systems (hawalas), store of value cards, trade-based money laundering, mobile or internet payments, crypto-currencies, non-profit organizations, donors, and front companies. While terrorist financing and money laundering may have different objectives, they share similar tactics that abuse international financial systems.
Lines of action
The U.S. strategy to counter money laundering and terrorist financing consists of three lines of action:
1. Intelligence and law enforcement operations against terrorist financiers and money launderers;
2. Public designations of terrorists or traffickers, sanctions, asset freezes, and seizures; and
3. Domestic and international training and capacity building in the counter-threat finance discipline for the public and private sectors.
Tracking how terrorists and criminals raise, move, store, and use money has been instrumental in degrading groups such as al-Qaida, FARC, and more recently the Islamic State group (IS). Defunding IS by neutralizing its chief financial officers and attacking its economic infrastructure directly contributed to the group’s demise and the liberation of IS-occupied Iraq and Syria. In 2015, IS was considered the wealthiest terrorist group in the world from its participation in extortion, oil smuggling, human trafficking, and antiquities looting.
Terrorist financing is a threat in the Western Hemisphere as well as in the Middle East. On September 19, 2018, two Trinidadian nationals, Emraan Ali and Eddie Aleong, were sanctioned as IS financiers by the U.S. Treasury Department. In February 2018, an IS-inspired terrorist attack planned for the Carnival celebrations in Port of Spain was discovered and thwarted by Trinidad and Tobago officials with U.S. assistance. Eddie Aleong was among those arrested, and subsequently released, for suspected involvement in the Carnival plot.
Fundraising in the Tri-border area
In the summer of 2018, concerns over Lebanese Hezbollah fundraising in the Tri-border area of South America (Argentina, Brazil, and Paraguay) returned to the headlines when Argentina’s Financial Information Unit froze the assets of 14 Lebanese residents of the Tri-border area on July 13th. The suspects entered Argentina scores of times and collected winnings for more than $10 million at a casino in Puerto Iguazú, Argentina, without declaring such amount when crossing the border. They’re suspected members of a criminal organization linked to Hezbollah and associated with the Barakat clan. Argentinian officials believe the clan is involved in smuggling, counterfeiting money and documents, extortion, drug and arms trafficking, money laundering, and terrorism financing for Hezbollah.
The clan’s patriarch, Assad Ahmad Barakat, is a Paraguayan resident and prominent businessman in the Tri-border area who was designated as a terrorist by the U.S. Treasury Department’s Office of Foreign Assets Control in 2004. He’s considered one of Hezbollah’s most important financiers. Barakat was convicted for tax evasion in Paraguay in 2004 (since terrorist financing laws were non-existent at that time) and received a six-year sentence. On August 28, 2018, Paraguay’s Ministry of the Interior announced an investigation to determine the April issuance of a Paraguayan passport to Barakat from the National Police. Barakat was no longer a Paraguayan citizen. He had been granted Paraguayan citizenship in 1989, but the Supreme Court of Justice revoked it in 2013, rendering the passport issuance unlawful. On September 21, 2018, the Brazilian Federal Police arrested Barakat in Foz de Iguaçu, Brazil, pursuant to an international arrest order for Barakat’s illicit acquisition of a Paraguayan passport.
Argentina, Brazil, and Paraguay recognize the continuing threat of Hezbollah’s terrorist financing in the area and are collaborating to address the threat. In September 2018, senior law enforcement and judicial officials from the three countries participated at a workshop on preventing terrorism and transnational crime in the Tri-border area, organized in Puerto Iguazu by the U.S. Department of Justice. The workshop focused on analyzing illicit trafficking, threat financing, and terrorism, improving investigations and case management, leveraging financial intelligence and promoting interagency and international cooperation to counter terrorism and crime. The timely workshop reinforced cooperation among the Tri-border government agencies charged with countering transnational threat networks, including those that support and finance Hezbollah.
Following the money trail proves to be an important financial instrument of national power for the United States and its allies. Not only is financial intelligence helpful to understand illicit networks and how they operate, but is also valuable in identifying the key financial leaders in threat networks who are difficult to replace. Denying these networks’ financing and targeting the financiers of terrorist groups like al-Qaida, IS, Hezbollah and transnational criminal organizations like the Mexican cartels are critical components of military and law enforcement operations to identify, degrade and dismantle these transnational threat networks.
*The author is professor of practice at the William J. Perry Center for Hemispheric and Defense Studies at the National Defense University, in Washington, DC. The views expressed in this article are those of the author and do not necessarily reflect the views of the William J. Perry Center for Hemispheric Defense Studies, National Defense University, or the Department of Defense.