The largest illicit economy in the Western Hemisphere

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The Tri-Border Area, where the cities of Puerto Iguazu in Argentina, Foz do Iguazú in Brazil and Ciudad del Este in Paraguay meet is rife with illicit financial activities. The magnitude of the threat in the TBS area is so great, authorities call it the “largest illicit economy in the Western Hemisphere.”  People also call the TBA the Golden Hydra because it is an entry point for leaders of foreign terrorist organizations and transnational criminal organizations immigrating from the Middle East. 

Why We Should Care About Terrorist Funding From The Western Hemisphere’s Largest Illegal Economy

The 2009 United States Department of State International Narcotics Control Strategy Report calls Brazil and Paraguay countries of primary concern and Argentina a country of concern for money laundering and financial crimes. About $400 million USD in profits from arms dealing, drug and human trafficking, forging documents and product piracy goes to the Middle East each year to fund radical Islamic groups. It’s said up to 70 percent of the TBA’s economic activity is illegal.

The financial crimes in the TBA can have far-reaching consequences. The International Monetary Fund has stated the terrorist financing and money laundering activities in the TBA are widespread and enough to impact legitimate worldwide capital flows. Ciudad del Este is the region’s commerce hub where street vendors sell everything from counterfeit products to AK-47s. Only Hong Kong and Miami have larger cash economies.

Geography

The approximately 2500 kilometer TBA, also known as the Triple Frontier, includes the convergence of the Iguazú and Paraná rivers and leafy tropical splendor. There are also the Iguazú Falls, which are larger than Niagara Falls and which have been featured in several movies and television shows. While the U.S. government warns travelers visiting the TBA region of Hezbollah extremists reported to be living in the area, they generally consider it safe for foreign tourists.

The vast, impenetrable jungles, far from tourist areas, make it easy for terrorist groups to hide training camps, bases, clandestine drug operations and up to 200 clandestine airfields. The inhabitants of jungle camps have easy access to banking and transportation services in the three TBA cities. A lack of government occupancy contributes to the problem.

The Population

In the TBA, Arabs, who are primarily Shia Muslims, make up one of the largest immigrant groups. Up to 30,000 Arabs live in Ciudad del Este and Foz do Iguaçu; they are mainly of Lebanese and Palestinian origin. In the 1960s, a large number of Arab immigrants settled in the TBA. To help preserve their heritage, they established their own mosques, organizations and schools. In the 1980s, terrorist groups began sending agents to recruit sympathizers, collect money, offer military training and hide fugitives. In 2000, Lebanese and Palestinian extremists came to the TBA from Columbia.

Terrorist Groups Operating in the Tri-Border Area

The United States Department of State expressed concerns about terrorist fundraising activities. Terrorist groups, including al-Qaeda, Hamas and Hezbollah receive support from the Arab population in the TBA. Al-Qaeda reportedly receives a large amount of funding from the rampant illegal tobacco trade in Ciudad del Este. Osama bin Laden supposedly visited Foz do Iguaçu in 1995. Hamas, the Palestinian terrorist group, hatches terrorist plots in the TBA and uses Paraguayan financial institutions to transfer funds. Hezbollah, a Lebanese terrorist group, has leaders in mosques in Ciudad del Este and their pro-Iram arm, al-Moqawama, is also present in the area. A top ranking Hizballah member, Sheik Mounir Fadel, is the spiritual leader at a mosque in Ciudad del Este. Other groups possibly operating in the TBA include Egypt’s Al-Gama’a al-Islamiyya and Al-Jihad.

The Library of Congress’ 2003 Terrorist and Organized Crime Groups in the Tri-Border Area report says the terrorist groups work together, even holding an Islamic terrorist summit in 2002 to plan attacks on U.S. and Israeli embassies and consulates in South America. It isn’t clear if the Lebanese Mafia and Hizballah have joined forces, however, Hizballah has frequently collaborated with various criminal organizations in other parts of the world.

TBA Country’s Responses

The Argentine Central Bank cooperates by freezing assets in Argentine financial institutions belonging to United States or United Nations-identified terrorist groups. Ciudad del Este, a city of only 300,000 in Paraguay, has almost 55 foreign exchange shops and banks. Paraguay lacks strong anti-terrorism laws and intelligence capabilities although they will prosecute suspected terrorist fundraisers for tax evasion and bank fraud. Brazil has extends significant support to combat terrorist fundraising activities, with the Brazilian Federal Police opening a regional office in Foz do Iguacu. In 2005, the U.S. provided training to Brazil’s Financial Activities Oversight Council which identifies possible terrorist funding sources. Despite numerous raids and arrests by all three countries, terrorist fundraising activities continue.

Widespread corruption, threats of violence against officials and weak anti money-laundering laws thwart cooperative efforts between the three countries. Poorly paid Law enforcement personnel receive inadequate training and support, making them susceptible to bribes.

Recent leadership changes in all three countries offer promise. To achieve long-term regional security and end terrorists and their fundraiser’s presence in the TBA, U.S. legislators hope to strengthen the Argentinian, Brazilian and Paraguay government’ s ability to address transnational crime.