Argentine authorities arrested four individuals last month suspected of financing Hezbollah using a cryptocurrency wallet. As Hezbollah has increased its military action against Israel, these arrests signal Argentina’s determination to deny the group vital funds for terror.
The arrests resulted from several raids that federal police carried out in two different provinces. In addition to the wallet connected to Hezbollah, police also seized weapons, electronic devices, and additional virtual wallets in the suspects’ possession.
In June 2023, Israel’s National Bureau for Counter Terror Financing (NBCTF) identified the virtual wallet that led Argentine police to their targets. The wallet’s operator was Tawfiq Muhammad Sa’id al-Law, a suspected Hezbollah financier. Israeli authorities also identified 39 additional cryptocurrency wallets suspected of funneling money to Hezbollah and Iran’s Quds Force and seized the equivalent of $1.7 million.
Al-Law worked with senior Hezbollah figures under U.S. sanctions to operate Hezbollah’s crypto funding infrastructure, according to Chainalysis, a company that identifies cryptocurrency threats and vulnerabilities.
In March, OFAC sanctioned al-Law for terrorism financing and publicly identified the virtual wallet he was using. The Argentine Financial Information Unit (UIF) then identified a Colombian citizen living in Argentina suspected of using that wallet to transfer funds to Hezbollah. The UIF is a governmental agency that monitors compliance with Argentina’s Anti-Money Laundering Law.
Argentine authorities believe 34 transactions worth $1.8 million involving the sanctioned wallet were made between March and June of this year.
Hezbollah, financed and armed by the Islamic Republic of Iran, has a history of terrorist activities in Argentina and South America’s Tri-Border Area, where Argentina’s border meets those of Brazil and Paraguay. In 1992, Islamic Jihad, which operates under the Hezbollah umbrella, bombed the Israeli Embassy in Buenos Aires, killing 29 people. In 1994, Hezbollah operatives bombed the AMIA Jewish Community Center in Buenos Aires, killing 85 people. A 2016 estimate valued the group’s annual proceeds from narcotics trafficking in the region at $400 million.
In 2019, Argentina became the first country in Latin America to designate Hezbollah as a terrorist entity. It was followed by Colombia, Guatemala, Honduras, and Paraguay.
In November 2023, Brazilian authorities arrested two suspected Hezbollah operatives for allegedly planning attacks against Jewish targets in the country. In January this year, Argentine police arrested three individuals for allegedly plotting similar terrorist attacks in Argentina.
Other U.S.-designated terror proxy groups backed by the Islamic Republic of Iran have also used virtual currencies to evade sanctions and fund terror. In October 2023, Israeli law enforcement closed over 100 wallets on the crypto exchange Binance connected with Hamas and requested information on 200 more accounts. U.S. authorities said that Hamas has leveraged cryptocurrency to finance terrorism since at least 2019. Since 2021, the NBCTF has ordered the seizure of over $41 million in cryptocurrency from Hamas’s virtual wallets and $93 million from accounts linked with Palestinian Islamic Jihad.
U.S. officials should encourage Latin American countries to designate Hezbollah and other Iran-backed proxy groups as terrorist organizations to help choke off their ability to finance terrorism. The Biden administration should also encourage the European Union to designate Hezbollah in its entirety. The European Union currently only considers Hezbollah’s so-called military wing to be a terrorist entity.
Washington should also underscore Hezbollah and Hamas’s abuse of virtual currencies to fund terrorism in discussions with the Financial Action Task Force (FATF), the global watchdog for anti-money laundering and countering terrorist financing. FATF should ensure its members close gaps in their cryptocurrency regulations that may enable Iran-backed proxies to fund their operations. These gaps may include inadequate legal instruments for seizing suspected wallets that national governments have sanctioned.
Toby Dershowitz is managing director at FDD Action, where Will Erens is a congressional relations intern. Ari Ben Am is an adjunct fellow at FDD’s Center on Cyber and Technology Innovation. His research focuses on emerging threats, influence and information operations, cyber operations, and hybrid warfare. FDD Action, a sister organization of FDD, is a non-partisan 501(c)(4) organization established to advocate for effective policies to promote U.S. national security and defend free nations. Follow Dershowitz on X @tobydersh and Ben Am @ari_ben_am.