August 31, 2018 | Policy Brief
Tri-Border Area Governments Take Action Against Hezbollah Networks
Paraguayan prosecutors ordered the arrest of Hezbollah financier Assad Ahmad Barakat yesterday, shortly after the country’s new president, Mario Abdo Benitez, ordered an investigation into Barakat’s illicit acquisition of a Paraguayan passport this past April. After a long period of turning a blind eye to Hezbollah, governments in the Tri-Border Area (TBA) of South America have begun taking action.
Assad Ahmad Barakat belongs to a powerful Lebanese Shiite family and serves as its leader in the TBA, whose name reflects its location at the intersection of the Argentine, Brazilian, and Paraguayan borders. The U.S. Treasury sanctioned Barakat in 2004 for bankrolling Hezbollah. Treasury then sanctioned two of his brothers, Hamze Ahmad and Hatem Ahmad, two years later.
The recent moves toward more vigorous law enforcement began on July 13, when Argentina’s Financial Intelligence Unit (FIU) froze assets of 14 Lebanese residents of the TBA. The targeted individuals were part of a criminal organization linked to Hezbollah and associated with the Barakat clan. The network transferred large quantities of cash across the TBA to the Argentinian side in Puerto Iguazu using the local casino, just yards passed Argentinian customs at the border crossings, to launder the money.
Since the targets of the FIU’s action are unlikely to hold substantial assets in Argentina, its main significance will be its role in deterring others and alerting Argentina’s neighbors to the magnitude of the threat. While the focus of the Barakats’ money laundering scheme was in Argentina, all three TBA countries were likely affected. Members of the network live and work in Paraguay and/or Brazil.
The actions of Argentine law enforcement have already spurred Paraguayan authorities to look into the Barakat network. Initial findings show that despite numerous criminal proceedings against Assad Ahmad Barakat and a Paraguayan Supreme Court decision to revoke his Paraguayan citizenship, Barakat was issued a new Paraguayan passport last April. As noted above, President Abdo has ordered an investigation and prosecutors have ordered Barakat’s arrest. The president’s national security team is also weighing options against the 14 individuals targeted by Argentina, who all have links to Paraguay.
In contrast to its neighbors, Brazil has yet to investigate what role the Barakats may have played under its jurisdiction. According to publicly available data from Brazil’s tax authorities, Assad Ahmad Barakat is currently a business partner in two companies in Foz do Iguacu, on the Brazilian side of the TBA, one of them with his brother Hamza, who is a partner in five other companies.
Brazil continues to be a base of operations for the Barakats despite U.S. sanctions and the Barakats’ frequent run-ins with the law. Assad was arrested in Brazil in 2003 and extradited to Paraguay for tax evasion; Hamze was arrested for fraud in Brazil in 2013 but released shortly after. Nonetheless, the Barakats have continued to conduct their business unimpeded, exploiting the structural weaknesses across the three jurisdictions to their own advantage.
All three regional powers in the TBA need to recognize the continuing threat of Hezbollah’s terror finance in the area and deal with it accordingly. Argentina’s action and Paraguay’s response show that both countries are more willing to take action than in the past. Brazil needs to join them to ensure coordination for their mutual benefit. The TBA governments should also strengthen cooperation across their three jurisdictions. The United States, in this respect, can support such efforts through joint training of local law enforcement, prosecutors, and investigators, as well as information sharing and facilitation of cross-border communication and joint actions to disrupt Hezbollah’s financial flows from the area.
Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies. Follow him on Twitter @eottolenghi.
Follow FDD on Twitter @FDD and follow FDD’s Center on Sanctions and Illicit Finance @FDD_CSIF. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.