The U.S. Department of Treasury sanctioned Lebanese national Kassem Mohamed Chams and his company, Chams Exchange Company SAL (otherwise known as Ali Mohamed Chams and Partner) yesterday. Treasury’s designation was issued pursuant to both the Kingpin Act and the Hizballah International Financing Prevention Amendments Act (HIFPAA), and it underscores the convergence of Hezbollah’s terror finance and narco-trafficking.
According to Treasury, “Kassem Chams and his international money laundering network move tens of millions of dollars a month in illicit narcotics proceeds on behalf of drug kingpins and facilitate money movements for Hizballah.” The money flows from Australia, Europe, and Latin America – including Brazil, Colombia, and Venezuela – on behalf of La Oficina de Envigado, a designated Colombian cartel. The drug money-laundering network is linked to Lebanese and Colombian national Ayman Joumaa, who was both sanctioned and indicted in 2011 for working with Colombian and Mexican cartels. Treasury’s announcement also noted that Chams Exchange operated out of Brazil and Venezuela, suggesting that Hezbollah’s other money laundering networks may operate there.
Treasury’s action highlights the broader nexus between drug trafficking cartels and terror financiers. In Latin America, crime syndicates involved in the production and trafficking of cocaine increasingly rely on Hezbollah’s illicit finance networks. Hezbollah levies a commission for facilitating the use of businesses and financial institutions, such as Chams Exchange, to subsidize their terrorist network, which is increasingly squeezed by U.S. sanctions.
The designation of Chams Exchange marks the first time Treasury used HIFPAA authorities since its congressional passage last October. The legislation imposes secondary sanctions not only on known Hezbollah entities, but also on those “determined by the President to be engaged in fundraising or recruitment activities for Hizballah.” Thanks to the secondary sanctions mandated in HIFPAA, future actions could target Chams Exchange’s business partners in Latin America, or any company or individual that rents facilities, provides banking services to, receives bribes from, or otherwise assists those designated for fundraising or recruitment. In short, the administration has an opportunity to take a network-centric approach toward Hezbollah’s criminal activities.
Finally, HIFPAA calls for enhanced due diligence measures for U.S. banks with respect to entire jurisdictions outside Lebanon, at the federal, state, or municipal levels. This means that if local politicians and bureaucrats in the countries mentioned in Treasury’s designation turn a blind eye to Hezbollah fundraising and recruitment in areas that they administer, Treasury could target them, as well
Treasury’s designation is an important first use of HIFPAA authorities. The wider net makes U.S. sanctions much more effective. And the revelation of another drug connection helps shine a light on the growing nexus between Hezbollah’s finances and narco-trafficking.
Emanuele Ottolenghi and Matthew Zweig are senior fellows at the Foundation for Defense of Democracies (FDD), where they also contribute to FDD’s Center on Economic and Financial Power (CEFP). Follow Emanuele on Twitter @eottolenghi. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.