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Coordinated Law Enforcement and Treasury Action Against Money Launderers in the Tri-Border Area

Written by The Frontier Post

Emanuele Ottolenghi

The U.S. and Paraguayan governments took coordinated action yesterday against the money laundering network of Kassem Mohamad Hijazi, a Brazilian citizen of Lebanese descent implicated in government corruption and Hezbollah terror finance. The move represents a long-overdue step to crack down on rampant corruption and illicit finance in the Tri-Border Area (TBA) connecting Paraguay, Argentina, and Brazil, but much work remains to be done.

Acting on a U.S. extradition request, Paraguay’s anti-narcotics teams arrested Hijazi and raided his business offices in Ciudad Del Este, a Paraguayan city located near the Argentinian and Brazilian borders. Within hours of his arrest, the U.S. Department of the Treasury imposed anti-corruption sanctions against Hijazi along with his first cousin, Khalil Ahmad Hijazi, and one of their associates, Paraguayan businesswoman Liz Paola Doldan Gonzalez. Treasury also designated five entities allegedly “connected with their corruption schemes.”

The TBA has long been a key hub for money laundering operations on behalf of organized crime and terror organizations. According to Treasury, the Hijazi money laundering organization “operates on a global scale with the capability to launder hundreds of millions of dollars.” A leaked U.S. diplomatic cable from 2005 called Kassem Hijazi “a principle Hizbollah [sic] fundraiser and activist,” alleging that he used “a portion of [his] laundered funds to support Lebanese Hizbollah activities.”

Thanks to their corrupt practices, the Hijazis and Doldan have until now enjoyed virtual impunity from local authorities. Though Paraguayan authorities had previously charged both Kassem Hijazi and Doldan, neither suffered significant consequences. Treasury noted that Hijazi “maintains connections to Paraguayan government officials to avoid law enforcement action against his money laundering organization.” For example, he “commands plain-clothed officers of the Investigation and Special Operations Division … of the Alto Parana Police Department in Paraguay to carry out activities for him in exchange for monthly payments.”

This is not the exception in Paraguay, but the rule. While the country’s top prosecutor touted Hijazi’s arrest as proof of Paraguay’s success in combating financial crime amid intense scrutiny from international financial watchdogs, illicit finance and corruption remain rampant.

Earlier this year, the U.S. State Department imposed anti-corruption sanctions against Ulises Quintana, a member of parliament from Paraguay’s ruling party. The State Department alleged that he “facilitated transnational organized crime, undermined the rule of law, and obstructed the public’s faith in Paraguay’s public processes.” Undeterred, Quintana is running for mayor of Ciudad Del Este, where most money laundering operations in the TBA are based.

Meanwhile, other major money laundering cases in Paraguay continue to languish. In fact, former President Horacio Cartes is wanted in neighboring Brazil for that crime yet continues to live freely in Paraguay, where he remains a key political player.

The Biden administration has vowed to treat “the fight against corruption as a core national security interest,” including by combating illicit finance. To fulfill this commitment, the administration should increase designations against corrupt regional officials and money laundering networks. Washington must also sustain pressure on Paraguay and other regional governments to clamp down on corruption and illicit finance.

Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Emanuele and CEFP, please subscribe HERE. 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.

Courtesy: (FDD)

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