The latest crime-ridden neighborhood to catch the attention of the Manhattan district attorney, Robert Morgenthau, is 4,500 miles south of the Battery.

For the past four years, a small investigative bureau under Mr. Morgenthau has focused on tracking the flow of money to New York banks from the “tri-border region” of Paraguay, Brazil, and Argentina. Several American government reports say that region has long been used as a base for Islamic terrorist groups such as Hezbollah, and the area has increasingly come under the surveillance of federal anti-terrorism investigators since the September 11, 2001, terrorist attacks.

The district attorney’s office, however, isn’t leaving all the work to the Treasury Department, the Drug Enforcement Administration, or the other divisions of government that monitor suspect banking transactions across the world. Several members of a 10-prosecutor bureau under Mr. Morgenthau called Investigations Division Central are now examining the banking transactions of more than 1,000 people and companies in South America, the bureau’s chief, Adam Kaufmann, said in an interview with The New York Sun.

Mr. Morgenthau characterizes his office’s efforts to regulate transactions between the tri-border region and New York banks as a local contribution to the predominately federal fight against terrorism funding.

“I’m under no illusion we’re going to shut down all the money laundering or prosecute the top guys in Al Qaeda, but what I can do is reduce the supply of money going to the terrorists,” Mr. Morgenthau said during a recent interview. “I think that’s a niche we are well-qualified to fill.”

Over his long career as a prosecutor, Mr. Morgenthau has seemed to relish conducting long-distance investigations. Such cases would be beyond the jurisdiction of district attorneys elsewhere, but Mr. Morgenthau has the advantage of holding office in Manhattan, the hub of so many of the world’s financial transactions, and where so many records are kept.

This international streak in Mr. Morgenthau dates back at least to the 1960s, when, as U.S. attorney in Manhattan, he investigated black marketeering by Americans in Vietnam. Mr. Morgenthau cemented his international reputation by leading American efforts starting in 1989 to investigate the Pakistan-founded Bank of Credit and Commerce International, which was eventually closed.

Investigations Division Central is known, both around the office and on the softball shirts of its members, as “DANY Overseas,” referring to the acronym for the district attorney of New York.

One example of Mr. Morgenthau’s attempt to foster closer relations with law enforcement in South America is his willingness to make his prosecutors available for seminars and training there. Earlier this month, Mr. Kaufmann traveled to Paraguay at the invitation of the American embassy in Asuncion to discuss anti-money laundering efforts with local officials. It was, he said, his fifth trip to the region related to his work for the district attorney.

So far, the investigation has netted settlements with Israel Discount Bank of New York, Bank of America and New Jersey-based Hudson United Bank, which has since merged with TD Banknorth. The settlements came after prosecutors found that the banks failed to implement basic “know your customer” regulations designed to ensure that money entering the banking system can be tracked back to its origins. In all, the district attorney’s office says, New York banks allowed billions of dollars to bypass basic controls against laundering money.

Currently, Mr. Morgenthau has charges pending against three dozen Brazilian money lenders for funneling money directly into bank accounts they hold in New York, without first routing their money through the Central Bank of Brazil as Brazilian law requires.

The investigation has led to the indictment of a former governor of Sao Paulo on charges of funneling allegedly stolen highway money through New York. Information the district attorney’s office has shared with Brazilian law enforcement about unlicensed money transmitters that were bypassing the Central Bank of Brazil in sending money abroad has led to more than 60 arrest warrants there, according to testimony to Congress by an aide to Mr. Morgenthau.

It is unclear how close Mr. Morgenthau’s investigators have come to identifying American dollars, Brazilian reais, Paraguayan guaranies, or Argentinean pesos that have ended up in the coffers of Hezbollah, or other terrorist organizations operating in the region.

“It’s hard to say what’s going to terrorism and what’s good old-fashioned crime and what is legitimate business,” Mr. Kaufmann said. “It’s all intermingled.”

The tri-border region has an Arab population of largely Lebanese and Syrian descent of between 20,000 and 30,000, according to press accounts. As with immigrant communities everywhere, there is a significant flow of money back to relatives still living in their parent countries.

One promising lead, two sources said, dates back to 2003, when the office began investigating transactions linked to one resident of the tri-border region, Assad Ahmad Barakat, whom the Treasury Department in 2004 officially designated as a terrorism financier linked to Hezbollah.

Companies connected to Mr. Barakat, who has been convicted in Paraguay of tax evasion, had sent money “in the five digits,” one former law enforcement official said, through several banks in New York.

The investigation involves “looking at people with businesses in shopping malls owned by Barakat and his associates and how they move money,” Mr. Kaufmann said.

In December 2006, the federal Treasury Department moved to seize any accounts under American jurisdiction that were linked to eight of Barakat’s associates. The Treasury Department also named a shopping mall in Ciudad del Este, Paraguay, linked to local Hezbollah members as generating funds for the organization.

At one point more than three years ago, the district attorney’s office got a court order to release grand jury evidence obtained through the investigation to Israel, two sources said.

The focus on the tri-border region began largely by chance. While pursuing tax cheats who were using offshore credit cards to hide income, the district attorney began investigating an unlicensed money transmitter in Midtown, Beacon Hill Services Corp. Beacon Hill’s records indicated that it had moved $6.5 billion in the decade before 2003, much of it through anonymous accounts, with a minimum of documentation, Mr. Kaufmann’s predecessor, Arthur Middlemiss, has said in congressional testimony. The bureau’s focus on South America started when prosecutors realized that much of the money was going between New York banks and the tri-border region, Mr. Morgenthau said.