James Snell is a writer and researcher. He has written for Spectator World, Foreign Policy and other outlets.
For years, countering kleptocracy — dirty money looted from the poorer parts of the world and embedded in more comfortable jurisdictions — has been the dogged pursuit of very few. Even in January of this year, I’m told, anti-kleptocracy campaigners were feeling like they were on the back foot.
But Russian President Vladimir Putin’s invasion of Ukraine, and Ukrainian resistance, has presaged a change.
Over the past three months of war, in numerous conversations, counter-kleptocracy campaigners have said they are busier and more influential than they ever dreamt they could be. On the phone, some of them sound hoarse, almost hysterical, with excitement. They say they the wind is finally behind them. But how far-ranging this change will be is yet to be seen.
After the Cold War it began to be understood that flows of stolen money not only robbed the world’s poorest, but they also corrupted and poisoned the countries where this money was stashed.
“It’s remarkable that it’s only been within a single generation that gains within the anti-corruption and transparency space have come about,” Casey Michel, the author of American Kleptocracy, said.
But this was all changed by the attacks on September 11, 2001. With legislative and policymaking attention consumed by the war on terror, and later the financial and health crises, anti-corruption campaigns languished. Instead, the Western world concentrated on getting rich and told itself all was well.
In the latter half of the decade, however, with political storms about “Russian bots” and the funding of populist politicians brewing, and increasing awareness of the ways in which the Chinese Communist Party sought to undermine democracy, the movement of dirty money into rich democracies became a rallying cry once again.
In 2014, the Hudson Institute established its Kleptocracy Initiative, forming part of a loose network of journalists and academics who kept the fire lit. And in 2016, in London, activists began chartering buses for the first “kleptocracy tours,” modeled on those given of the homes of Hollywood stars, but of the houses bought up by corrupt cash instead.
“In the middle of last year, the Biden administration elevated corruption to a core national security threat — for the first time ever,” Michel said. An anti-kleptocracy caucus was founded in the United States Congress. And across Europe, groups of parliamentarians pushed for Magnitsky laws — named for Sergei Magnitsky, an anticorruption campaigner who died suspiciously in a Russian jail.
But then Russia invaded Ukraine, annexed Crimea, and the sanctions followed. Everything was galvanized.
“Putin’s invasion could have been the death knell of the West,” a Washington, D.C. operator told me over the phone, “but the Ukrainians saved our asses” — a view that is widely shared.
Given time by Ukrainian self-defense, the West started sanctioning oligarchs, and countries raced to seize Russian-owned yachts as fast as possible. Think tanks across Europe and America immediately established programs to monitor Russian dark money, as well as the malign influence of global kleptocracy. The European Commission began a Freeze and Seize Task Force to enforce sanctions, while the U.S. announced Task Force KleptoCapture to the same effect.
However, seizing and sanctioning the wealth of Russian oligarchs is only one aspect of a larger movement. Could it be possible that this conflict, and the bureaucratic and legislative flurry that followed it, are a one-off?
I was assured that although these entities appeared rapidly, they would not be gone tomorrow. “Once you form a government institution, it doesn’t go away. The hardest thing is to get government in motion. But once it starts, it’s hard to stop it,” a D.C. source said.
Nonetheless, there is still reason to be wary. Momentum is difficult to maintain.
Anti-corruption campaigners note that, just as in the time before Russia’s invasion, powerful trade groups in law and property are lobbying to secure opt-outs from new legislation, and that across the world, less attention is still being paid to functionaries — lawyers, realtors, hedge-funders — who are the ones holding and managing dirty money, setting up the shell companies and offering additional services to lubricate the kleptocratic machine.
For example, the U.S. Patriot Act, with its strong anti-money laundering prescriptions, is still in force 21 years after it was first passed. “But shortly after, the Treasury issued all these exemptions for all these industries,” Michel said. “They were supposed to be temporary, but 20 years later, they’re still in place.”
Additionally, American and European policymakers are now busy throwing mud at each other.
The Americans have, according to one observer, moved seamlessly from characterizing the United Kingdom as the financial laundromat of the world to holding France and Germany uniquely responsible for dragging their heels on Russian money.
Meanwhile, British politicians chafe at what they consider outdated references to “Londongrad” in the American press, and entirely real concerns about kleptocrats’ predatory use of Britain’s libel laws to silence critics are buried amid these petty gripes.
More practical problems are emerging as well.
Canada’s Shadow Foreign Minister Michael Chong and British Foreign Affairs Select Committee Chair Tom Tugendhat wrote in April, significant international cooperation is still required to prevent kleptocrats from simply falling through the cracks of the new system as it is created. They say there are deficiencies in the “legal coordination, regulatory asymmetries, poor financial intelligence-sharing, and too little enforcement” of the new regime.
Without a solid architecture in place, they argue, not only will Russian oligarchs skirt sanctions, but any new system will entirely fail to catch dirty money flowing in from other jurisdictions.
Ben Judah, a fellow at the Atlantic Council, said that institutional problems, like data management and staffing, still stymie effective enforcement. “It’s always concerning when there’s a growing gap between what we say we can do and what we can do.”
“In Britain we have most of the laws we need, most of the registers we need, and we [still] don’t do much enforcement because we don’t have the capacity,” he added.
Despite these concerns, everyone I spoke to showed enthusiasm for using the momentum of these last months to clean up European and world politics, to repatriate money stolen from the poor, even to expose the illicit corporate purchasing of politicians.
These are ambitious hopes. They are built upon good intentions and the thrill of putting things theorized for decades into quick action. But for the moment at least, even with all the recent developments, there seems no route to remake the financial world.