Kingpins and Corruption: Targeting Transnational Organized Crime in the Americas - American Enterprise Institute

Key Points

• Transnational organized crime resides at the heart of nearly every major threat confronting the Americas today. These organizations systematically degrade democratic institutions and the rule of law, stunting economic growth and stifling legitimate commerce and investment.
• The threat of transnational organized crime in the Americas requires greater focus and investment from policymakers to effectively combat illicit trafficking networks, corrupt government officials, gang activity and violence, and the growing presence of hostile extra-regional actors such as Iran and its proxy, Hezbollah.
• The US government should engage with regional allies to restore the hemispheric coalition against transnational organized crime. The Trump administration can lead the way by applying asymmetrical policy tools such as targeted sanctions while also working to enhance enforcement capabilities, promote economic development, and develop counterterrorism legal frameworks in neighboring states.

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Executive Summary

Transnational organized crime resides at the heart of nearly every major threat confronting the Americas today, whether it is the deadly opioid crisis hurting US communities, the catastrophic collapse of oil-rich Venezuela, or debilitating gang violence throughout Central America, which spills over into the streets of American cities. These crises can be traced to criminal networks that garner billions from the production of illicit drugs, human trafficking, and extortion.

These organizations relentlessly attack democratic institutions and the rule of law, stunting economic growth and stifling legitimate commerce and investment. Their criminal networks, largely bankrolled by consumers of illicit drugs in the United States and Europe, respect no borders and operate with virtual impunity in countries ravaged by corruption and violence.

Disrupting those transnational operations requires international cooperation, and for decades, US aid and diplomacy has prioritized this partnership. Regrettably, political developments have undermined the willingness or capability of key states in the Western Hemisphere to effectively implement efforts against transnational organized crime.

Now, more than ever, the United States must work with regional allies to restore the hemispheric coalition against transnational organized crime. US policymakers can lead the way by applying asymmetrical tools, such as financial sanctions targeting transnational organized crime kingpins and corrupt officials, and working to enhance local enforcement capabilities and promote economic development. Such proactive engagement signals US resolve to confront the transnational organized crime threat and levels the playing field for states that lack the resources to confront these powerful syndicates.

This report focuses on the threat posed by transnational organized crime in the Americas, elucidating a series of effective policy prescriptions for Congress and the Trump administration. The report’s seven sections present an overview of tools available to the government and spotlight transnational organized crime threats that demand more attention and action from US authorities.

• The US government has the means and legal framework to counter transnational organized crime. However, effectively implementing such policy will require strong political will and the proper allocation of resources.
• As Colombia begins implementing its peace accord with the Revolutionary Armed Forces of Colombia (FARC), dissident guerrillas and the country’s other organized criminal groups threaten to undermine this major undertaking. These dissidents’ deep ties to demobilized FARC leaders and the cocaine trade, their international connections, and their historical control over a significant portion of the FARC’s financial assets demand special attention.
• Venezuelan government officials are actively involved in international crime and using state resources, including military assets, to support illicit activities such as money laundering and drug smuggling. These officials also have collaborated with extra-regional actors such as Iran and Hezbollah, incorporating them into their criminal networks.
• Iran has gradually increased its official profile and influence in Latin America in recent years. Connections to Lebanese Shi’a expatriate communities enable Iran and its proxy Hezbollah to operate clandestinely in the region. Hezbollah’s integration into the region’s existing transnational criminal networks poses a severe threat to US and regional security.
• The adaptability, endurance, and ruthlessness of gangs in Central America make them a unique transnational criminal threat that destabilizes the region. Gangs such as MS-13 are working to diversify their criminal activity, integrating themselves into drug trafficking operations and even political activity, with mixed results.
• Corrupt officials in Central America actively participate in and support a larger network of international illicit financing and smuggling. In El Salvador, Farabundo Martí National Liberation Front leader José Luis Merino acts as the country’s primary “fixer,” using his influence and international connections to finance and launder money for drug traffickers and corrupt Venezuelan officials.
• Despite concerted government efforts, violence and associated mortality rates have spiked in Mexico in recent years. New approaches and honest recognition of underlying causes by both the United States and Mexico are required to effectively confront the threat.

Key Findings and Recommendations

• Key enforcement mechanisms and policy options available to the US government to counter transnational organized crime remain underused and under-resourced. The US government should reevaluate the allocation of resources involved in countering transnational organized crime in the Americas. It should also more aggressively use enforcement mechanisms at its disposal (such as sanctions and criminal prosecution) to degrade threat networks and promote regional security and development cooperation.
• To ensure the prospects for peace in Colombia, the US government should target, seize, and repurpose illicit funds hidden abroad by the FARC. It should ensure that these funds are devoted to the successful implementation of the peace agreement. At the same time, it should support Colombia’s security forces seeking to deny criminal groups the opportunity to fill the void left by the FARC’s eventual demobilization.
• US policymakers should continue applying sanctions against key Venezuelan officials whose criminal activities help sustain the authoritarian regime. Sanctioning officials such as Diosdado Cabello would further expose the regime’s rampant criminality and undercut its oppression of the Venezuelan people.
• Latin American states that lack counterterrorism legal frameworks could benefit from US assistance in developing a legislative agenda to address this problem. The US government can also expand its own legislation, including the Hezbollah International Financing Prevention Act of 2015, to better target terror groups operating in Latin America.
• To dismantle criminalized state structures, the US should target their key enablers, including Salvadoran kingpin José Luis Merino, with financial investigations and sanctions. It should also support the anticorruption efforts of attorneys general and advocate for adopting internationally backed anticorruption bodies.
• The United States can help address the roots of the gang problem in the Northern Triangle countries of Central America by helping them overhaul their overcrowded and unsecure prison systems and coordinating with them on deporting and reintegrating gang members. It also should work with local governments to address underlying causes of proliferating gang membership and violence.
• Fighting transnational organized crime in Mexico is a complicated task that requires adequate human and material resources, efficient law enforcement agencies, and willing partners to fight a threat that evolves, adapts, and operates across national borders. The US and Mexico should modernize their cooperation on countering transnational organized crime based on a recognition of the structural corruption in Mexico that undermines the rule of law, law enforcement efforts, and international cooperation. Also, US authorities should consider closing legal loopholes related to arms exports and opioid prescriptions.

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