April 18, 2018 | House Homeland Security Committee
State Sponsors of Terrorism: An Examination of Iran’s Global Terrorism Network
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Chairman King, Ranking Member Rice, thank you for the opportunity to testify on behalf of the Foundation for Defense of Democracies and its Center on Sanctions and Illicit Finance.
Since its establishment, the Islamic Republic of Iran has viewed Latin America as a fertile ground for the export of its revolution. Tehran wants the Western Hemisphere to become a hotbed of anti-Americanism and a forward operating base for Iran. To this end, over nearly four decades, Tehran has built a network of mosques and cultural centers across the region. It aggressively expanded its base of supporters and sympathizers by dispatching itinerant preachers, who have successfully converted and radicalized thousands of Latin Americans to Iran’s version of Shi’a Islam. Iran has also helped Hezbollah establish itself as the dominant force among expatriate Shi’a Lebanese communities in the region. Hezbollah clerics and emissaries have taken control of their religious and communal institutions such as mosques, schools, cultural associations, and youth movements.
Where and when needed, these networks can also be activated to provide logistical and financial support to operatives engaged in planning terror attacks, safe haven for fugitives, and a source of revenue and illicit procurement for both the Iranian regime and Hezbollah itself.
In recent years, Hezbollah’s Latin American networks have also increasingly cooperated with violent drug cartels and criminal syndicates, often with the assistance of local corrupt political elites. Cooperation includes laundering of drug money; arranging multi-ton shipments of cocaine to the United States and Europe; and directly distributing and selling illicit substances to distant markets. Proceeds from these activities finance Hezbollah’s arms procurement; its terror activities overseas; its hold on Lebanon’s political system; and its efforts, both in Lebanon and overseas, to keep Shi’a communities loyal to its cause and complicit in its endeavors.
This toxic crime-terror nexus is fueling both the rising threat of global jihadism and the collapse of law and order across Latin America that is helping drive drugs and people northward into the United States. It is sustaining Hezbollah’s growing financial needs. It is helping Iran and Hezbollah consolidate a local constituency in multiple countries across Latin America. It is thus facilitating their efforts to build safe havens for terrorists and a continent-wide terror infrastructure that they could use to strike U.S. targets.
It would be a mistake to view these networks as peripheral to Hezbollah or even connected to it only by virtue of their members’ origins and the sympathy some of them may feel for Hezbollah and its cause. Equally, this is not solely a challenge for law enforcement agencies. Reliance on criminal activities to generate revenue is integral to Hezbollah’s modus operandi and forms a substantial part of its operating budget. It enjoys the full support and oversight of its leadership. Nearly two decades of sanctions and law enforcement investigations that led to successful indictments, primarily from U.S. court cases prosecuting Hezbollah operatives involved in a variety of criminal activities, show that Hezbollah’s networks are equal part crime and terror.
Operatives dispatched to Latin America to run drug smuggling, gun running, and money-laundering activities often stem from the Business Affairs Component (BAC) of Hezbollah’s External Security Organization (ESO), a unit inside the terror group also referred to as the Islamic Jihad Organization (IJO). Its members are trained for both terror operations and economic warfare and engage simultaneously in both activities. Their economic activities – which include trade-based money laundering and the laundering of illicit proceeds through real estate – are in and of themselves a threat to the integrity of the U.S. financial system.
Hezbollah facilitators use methods that are typical of trade-based money laundering techniques – such as over- and under-invoicing, misstating items of merchandise, their weight, and value – in order to move money across continents. They use U.S. registered commercial vectors to transport their merchandise. In addition to smuggling drugs inside the United States and plotting attacks on U.S. targets inside the United States and overseas, Hezbollah’s illicit finance networks often use U.S.-based front companies, launder money through U.S. banks, and invest in the U.S. real estate sector to support their terror finance schemes. They therefore constitute a threat to homeland security.
This makes Hezbollah, its senior leadership, and its numerous operatives involved in running illicit drug trafficking and money laundering operations on a global scale, the perfect candidates for Kingpin and Transnational Crime Organization designations, in addition to the terrorism and terror finance designations already in place.
Developing a strategy to combat this growing risk to the American homeland needs to be a U.S. policy priority. The United States cannot continue to combat a threat of such magnitude, without first recognizing the Hezbollah terror-crime nexus and then leveraging all its tools of statecraft in a combined, sustained, and coordinated fashion. My recommendations, discussed more at length at the end of this testimony, are:
UPDATE EXISTING SANCTIONS AGAINST HEZBOLLAH TERROR FINANCE NETWORKS
TARGET ENABLERS WITH GLOBAL MAGNITSKY AND THE HEZBOLLAH INTERNATIONAL FINANCE PREVENTION ACT
SANCTION HEZBOLLAH AND ITS SENIOR LEADERSHIP WITH TRANSANTIONAL CRIMINAL ORGANIZATION AND KINGPIN DESIGNATIONS
IMPOSE 311 DESIGNATIONS ON FINANCIAL INSTITUTIONS ASSISTING HEZBOLLAH IN LATIN AMERICA
EMPOWER LAW ENFORCEMENT TO GO AFTER HEZBOLLAH’S GLOBAL FINANCIAL NETWORKS
PROVIDE ADDITIONAL RESOURCES TO INTELLIGENCE AND LAW ENFORCEMENT AGENCIES DEPLOYED IN LATIN AMERICA
PROVIDE ADDITIONAL RESOURCES TO TREASURY
TARGET FINANCIAL HOLDINGS AND FINANCIAL INSTITUTIONS USED BY HEZBOLLAH TO MOVE MONEY TO AND FROM LATIN AMERICA
BUILD LOCAL CAPACITY WITH REGIONAL ALLIES
IMPROVE CONTROLS AT PORTS OF SHIPMENT TO AND FROM LATIN AMERICA
Download the full testimony here.