Foreign Policy Digital

Paraguay Is a Fiscal Paradise for Terrorists

The South American country needs to do a better job patrolling its financial system—or face the consequences.

The U.S. Department of Justice last year designated Hezbollah, a Lebanese political party and militant group, as a transnational criminal organization, thanks to its long-standing and well-documented partnership with Latin American drug cartels. A focal point of Hezbollah operations in the Western Hemisphere is the Tri-Border Area of Argentina, Brazil, and Paraguay, a sanctuary for all sorts of organized crime. Numerous terrorism financing, money laundering, and drug trafficking cases in U.S. courts involve Hezbollah-aligned Lebanese nationals who operate there. Argentina and Brazil have shown an increased readiness to take action against Hezbollah, but Paraguay, the country where Hezbollah is most vulnerable to action, is the most reluctant to recognize the challenge.

Paraguay’s president, Mario Abdo Benítez, in power since last August, is under pressure to change that. Despite , his administration remains plagued by the same problems his predecessors could not overcome, and a reckoning is coming. This year, the Financial Action Task Force, an intergovernmental organization, will evaluate Paraguay to assess the of Asunción’s anti-money laundering and counterterrorism finance systems, for which the task force sets global standards. Countries that do

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