AML CHALLENGES

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Politics, criminality and terrorism in Latin America

In Latin America, the activities of drug cartels, terrorist groups and rogue states

have increased as revolutionary regimes such as Venezuela and its allies in Ecuador, Bolivia and Nicaragua took the reins of power in the last decade.

AML CHALLENGES

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The war against Mexican drug cartels is often portrayed as a war against a crim-inal operation taking place in Mexico. Furthermore, it is also portrayed as a problem between the U.S. and Mexico.

However, a strong case can be made that drug cartels also constitute part of an asymmetric war not only against the U.S. but against many countries in the region, as well. According to Dr. Max G. Manwaring, a professor and expert in military strategy at the Strategic Studies Institute in Washington D.C., an asym-metric war includes not just non-con-ventional warfare such as nuclear war

and terrorist guerilla attacks but is comprised of highly complex political acts. In this sense, Hugo Chávez, leader of the Bolivarian Revolution, under-stood that the “process leading to state failure is the most dangerous long-term security challenge,” since a “failing and failed state status is the breeding ground for instability, criminality, insurgency, regional conflict and terrorism.”1 Thus, the erosion of the stability, security and effective sovereignty of the nation state caused mainly by the criminal activities of the drug cartels, gives way to anarchy. Drug cartels can buy elected officials, judges, police and other elements in the

state bureaucracy. Thus, society itself deteriorates up to the point of becoming vulnerable as the law turns into ashes. This vacuum of power can be used by a pro-Chávez leader to take over the reins of power. Drug cartels would be interested in this situation since the new regime would protect drug cartels by granting them free movement.

Likewise, drug cartels have a secondary function in the eyes of these countries. Drug cartels poison Western and U.S society by causing them harm. As the scholar Ari Chaplin rightly points out, Fidel Castro used the drug trade as a

1 Max G. Manwaring, “Venezuela’s Hugo Chávez, Bolivarian Socialism, and Asymmetric Warfare,” Carlisle, PA: The Strategic Studies Institute, U.S Army War College, October 2005, p. 22.

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AML CHALLENGES

means to harm the U.S. Likewise, Chaplin reminds us that Iran, who like Castro, is an ally of Venezuela, pointed out that “drug trafficking is a means to destroy the sons and daughters of the West.”2

The drug business is also an important source of income that continues to fuel the revolution and reward those who lead it. In Venezuela, a country that has led a new socialist revolution in Latin America and declared open hostility toward the U.S., drug trafficking involves the top echelons. Last summer, General Hugo Carvajal—who served as Venezuela’s chief of intelligence between 2004 and 2011 and was reappointed by Venezuelan President Nicolás Maduro for a brief period last year—was arrested in Aruba at the request of the U.S. for his involvement in drug trafficking. Carvajal was allegedly in charge of collecting drug shipments from the Colombian narco-terrorist organization known as the Revolutionary Armed Forces of Colombia (FARC). Carvajal allegedly controlled the entire distribution of drugs to the U.S. and Europe and was in charge of laundering drug money through the Venezuelan oil giant, PDVSA. Unfortunately, under threats from the Venezuelan government, Aruba sent Carvajal back to Venezuela instead of responding to the U.S.’ request to have him placed in American custody.

The late Hugo Chávez offered Venezuelan ports and airports to the drug cartels. According to a report by the U.S. Government Accountability Office in 2009,3 Venezuela extended a lifeline to Colombian illegal and armed groups by providing them with significant support and safe haven along the border. As a result, these groups remain viable threats to Colombian security and U.S.-Colombian counternarcotic efforts. The report provided evidence of the activities and cooperation between the Venezuelan government with drug cartels and FARC.

The report also revealed that the flow of cocaine shipped from Venezuelan ports and airports to the U.S., West Africa and

Europe increased more than four times from 2004 to 2007 and continues to increase. Likewise, cocaine destined for the U.S. from Venezuela transits through Central America, Mexico, the Dominican Republic, Haiti and other Caribbean islands. Between January and July 2008, numerous vessels with Venezuelan flags that were carrying large amounts of cocaine were seized.4

Such cooperation with drug cartels expanded to countries that are allies of the Venezuelan regime. According to a WikiLeaks report, Nicaraguan President Daniel Ortega is a staunch ally of Venezuela and received funding from drug cartels. In Bolivia, the activities of drug cartels have spread out since Venezuela’s ally Evo Morales came to power. Ecuadorian President Rafael Correa received funding for his electoral campaign from FARC, according to one of the FARC leaders. In addition, Ecuador is a major transshipping point for much of the coca-derived powder produced in Bolivia and Peru. Venezuela, Bolivia and Ecuador expelled the Drug Enforcement Administration (DEA) agents years ago, providing a freer environment for the drug cartels. The fight against drugs is viewed by these countries as an imperi-alist, U.S endeavor.

This aggravates the situation in other countries in the region. In Central America, the drug criminal activity in countries such as Honduras, Guatemala and El Salvador, has led to anarchy and state weakness.

Such crisis creates problems such as the emigration of children to the northern border. In the words of President Juan Orlando Hernández, of Honduras, these minors are “displaced persons” as a result of a war caused by drug trafficking, and related fights between gangs to seize control of crime and recruit children and teenagers for criminal purposes. Hernández charged that the U.S. govern-ment is making a minimal effort to fight criminal organizations that ship drugs

to the U.S. President Salvador Sánchez Cerén of El Salvador, made an appeal to double efforts to fight drug trafficking and crime.

The presence of terrorism presents another problem aggravated by the revolutionary regimes and the anarchy created in the region. Iran and its proxy, the terrorist organization Hezbollah, have a strong presence in Latin America. Iran has used the Venezuelan banking system (with the Venezuelan government’s coop-eration) to avoid sanctions imposed on it by the international community over its nuclear program. An arrangement between the Venezuelan and Iranian governments created a bi-national Iranian-Venezuelan development bank—that is, in fact, a partnership between the Banco Industrial de Venezuela and Iran’s Export Development Bank. This partnership created a new entity, the Banco Internacional de Desarrollo, and embarked on other deals, such as opening offices of Iran’s commercial insti-tutions in Venezuela. Their branches have expanded into Ecuador with the clear purpose of avoiding financial sanctions on Iran.

Furthermore, Iranians and other citi-zens from the Middle East have received passports from Venezuela or purchased them in other countries of the region associated with Bolivarian Alliance for the Peoples of Our America (ALBA) countries. Likewise, Iran is believed to have purchased uranium from Venezuela and Bolivia to help develop its nuclear capabilities.

Cooperation between Iran’s proxy Hezbollah and drug cartels is also taking place. Hezbollah has helped build sophis-ticated tunnels to smuggle drugs into the U.S. from Mexico. These tunnels are equipped with electricity, ventilation and a rail system. Hundreds of tons of cocaine were transferred through these tunnels. These tunnels connect between ware-houses or between two regular houses on both sides of the border. In fact, what

2 Ari Chaplin, Chávez’ Legacy: The Transformation from Democracy to a Mafia State, University Press of America, 2014, p. 173.3 U.S., Government Accountability Office, “Drug Control: U.S Counter-Narcotics Cooperation with Venezuela Has Declined,” July 20, 2009, http://www.gao.

gov/assets/300/292722.pdf4 Ibid.

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Hezbollah did on the Lebanese/Israel border is no different than what we have seen on the U.S./Mexico border. According to reports, Hezbollah helped the cartels build those tunnels in the image of the same tunnels it had built in Southern Lebanon. Just to be clear, tunnels in the Southern U.S. are more difficult to detect than in Gaza. Hezbollah could use these tunnels to carry out terrorist attacks in the U.S. In fact, in October 2011 there was an attempt to kill the Saudi Ambassador in Washington, D.C., with the help of the Zetas cartel. This shows the affinity of drug cartels with terrorist groups.

Likewise, the Colombian guerilla group FARC, which operates as both a drug cartel and a terrorist organization, produces 70 percent of the total Colombian refined cocaine and controls the shipments of drugs out of Colombia. From Colombia most of the cocaine passes through Venezuela, up through Central America and into Mexico where Mexican drug cartels market, sell and transport the product into the U.S.

In addition to FARC and Hezbollah, the anarchy that now characterizes a good part of Central America could be a draw for other terrorist groups. Next, it could well be the Islamic State of Iraq and the Levant known as ISIL or ISIS. Their al-Qaeda style of threatening the U.S., their ruthlessness with respect to human lives and their search for financial resources could make Latin America an easy target for their brand of terrorism. The expanding drug business and lawlessness provide a sort of safe haven and a strategic place from where they could carry out a number of activities.

First, ISIL would be in an area geographi-cally close to the U.S. As such, they could kidnap Americans and extort them easily in exchange for money. Secondly, they could obtain documentation that would allow them free movement in the conti-nent that could make U.S. embassies and other institutions vulnerable to terrorist attacks. Finally, ISIL could deepen its involvement in the drug trafficking and

criminal activities in Latin America to help provide funding resources to their murderous organization.

As pointed out, Hezbollah, of course, has been doing all of the above for a long time. Anti-money laundering (AML) professionals as well as other financial crime preven-tion professionals need to be aware of the dangers to understand the multisided dimen-sion of this complex criminal and political coalition. Financial transactions coming from ALBA countries whereas they come from governments or individuals need to be carefully monitored. Certainly it is crucial to question money moving from these countries or any country in Latin America to the Middle East or vice-versa. None of these themes are properly strategized as they should be and the time has come to do so.

Luis Fleischman,5 senior advisor, Menges Hemispheric Project, Center for Security Policy, Washington, D.C., USA, lfleisch@hotmail.com

5 He is also the author of Latin America in the Post-Chávez Era: The Security Threat to the United States.