Treasury targets Colombian rebel cash flows

WASHINGTON (Reuters) - The U.S. Treasury on Tuesday moved to increase financial pressure on a leftist Colombian rebel group by banning transactions with two money exchanges and four individuals linked to the group.

The Treasury said its designation of the firms as narcotics traffickers aimed at reducing the ability of the Revolutionary Armed Forces of Colombia, or FARC, to launder money from illegal drug sales.

The Treasury said the two Bogota-based money exchanges, Cambios El Trebol and Cambios Nasdaq Ltda., accepted foreign currency and provided pesos that FARC could use to fund its activities in Colombia.

It also designated four individuals it said were involved in FARC cocaine production and sale, including the owner of Cambios Nasdaq, Carlos Olimpo Diaz. The action by the Treasury's Office of Foreign Assets Control (OFAC) bans Americans from doing business with them and seeks to freeze any assets they may have under U.S. jurisdiction.

The Colombian government has been battling FARC for four decades and U.S.-backed president Alvaro Uribe has intensified a crackdown on the rebel group in recent years. The U.S. State Department branded FARC as a foreign terrorist organization in 1997, while President George W. Bush labeled it a significant foreign narcotics trafficker in 2003.

"Today's designation continues our targeted campaign to take down the FARC's financial networks, especially those utilized to launder their narcotics proceeds," said Barbara Hammerle, deputy director of OFAC, the Treasury's sanctions arm.

The designation of the Colombian firms and individuals is the Treasury's third action against FARC in the past five months.

The stepped-up Treasury campaign comes as the Bush administration tries to persuade the U.S. Congress to approve a free trade agreement with Colombia.

Although the administration is touting an improved security situation in Colombia, Democratic leaders in the House of Representatives opposed to the deal have raised concerns about human rights abuses against Colombian labor leaders, who have been linked by one of Uribe's advisers to leftist guerrillas.

(Reporting by David Lawder; Editing by Eric Walsh)