Experts: Russian corruption money is a threat to US national security

Dirty Money: Sightseeing Russian corruption in London

Experts: Russian corruption money is a threat to US national security

Experts: Russian corruption money is a threat to US national security

In Western countries, there is a growing political will to fight the shadow machinations of kleptocratic regimes

Western national security experts have noted for a long time that rogue states, terrorists, criminals and kleptocrats are increasingly withdrawing corrupt funds from their countries through anonymous Western offshore campaigns..

Such corrupt, or shadow, money began to pose a threat to the national security of Western countries, experts at the Atlantic Council in Washington emphasize. In their report, “Defending the United States from Russian Shadow Money,” authors Anders Aslund and Julia Friedlander note that Russia is one of the main countries that export corruption money to the West and use it against the Western countries themselves..

During an online presentation to the Atlantic Council on Thursday November 17, Democratic Senator Sheldon Whitehouse noted in his audience address that kleptocrats are withdrawing funds in the absence of the rule of law in their countries. In doing so, they use the rule of law in the West to protect the withdrawn funds. Another serious problem is that countries from which corrupt funds are withdrawn are often opponents of Western countries, and their actions undermine Western values ​​and institutions..

“Russia is undoubtedly a key player here,” the Democratic senator said..

He also emphasized that there is bipartisan support in the US Congress for the adoption of regulations to end the registration of anonymous companies in the US. These provisions may become law in the near future as part of the annex to the new US defense budget for 2021 (National Defense Authorization Act, or NDAA), the senator added..

Atlantic Council expert and economist Anders Aslund (Anders Aslund) notes that shadow money brought to the West by kleptocrats is often used to exert external influence – through financial donations to politicians, hiring lobbyists and forging necessary business connections..

Corrupt money comes to the West from different regions of the world, including China and Iran, but the largest amount of funds is withdrawn from Russia, the expert emphasizes. According to him, the funds withdrawn from Russia amount to about a trillion US dollars, while on average from 30 to 40 billion dollars are withdrawn from the country per year. “Much of this amount is controlled by Putin and his friends through preferential terms of purchases from state-owned companies, in particular through Gazprom, as well as through the sale of assets,” says Anders Åslund.

“And the reason why Russian offshore funds pose a serious threat is because the Russians are willing to use them [for subversion in the West],” adds Anders Åslund. “We can also see that Russians use the best of the best when it comes to [Western] lawyers, auditors, public relations specialists.”.

The expert refers to a number of cases described in a special investigation by US Attorney Robert Mueller about Russian interference in the 2016 US presidential elections and in the Panama Papers – confidential documents of the offshore law firm Mossack Fonseca that became public in 2012. For example, one of the examples cited in the report is the hiring of a Russian businessman close to the Kremlin, Oleg Deripaska, of Paul Manafort, former campaign manager and then presidential candidate, Donald Trump, to establish close contacts with politicians in the United States. Kirill Dmitriev, CEO of the Russian Direct Investment Fund with US experience, “is Putin’s confidante for the American elite,” the authors write..

An American-British entrepreneur, a native of the USSR, Leonid Blavatnik, who made his fortune mainly in Russia and donated large sums to companies of politicians from the Republican Party, is the most “striking example” of the cases described, said Anders Aslund.

“Shadow money is a serious threat to [the US] national security,” he concludes.

“Russia is the most striking example of this phenomenon,” adds the co-author of the report and an expert from the Atlantic Council. Julia Friedlander (Julia Friedlander), formerly also on the White House National Security Council and the US Treasury.

The former official emphasizes that the United States needs to rethink its national security in the financial sphere, developing a series of legislation and improving the interaction between those institutions whose task is to combat financial crime. One problem, according to Julia Friedlander, is that after the September 11, 2001 terrorist attacks in Washington, a number of bills were drafted to strengthen the US’s ability to track money laundering abroad, in particular to prevent the financing of terrorist groups. However, the growing number of foreign kleptocrats withdrawing corrupt funds to Western countries and using them against Western societies themselves received less attention. As a result, the relevant US departments do not have enough experience in combating this phenomenon, and there are a number of bureaucratic barriers in terms of coordination and access to the necessary information..

Another problem is that at the legislative level there are a number of provisions regulating the fight against money laundering in the banking sector, however, “shadow” money passing through offshores is often directed to real estate, law firms or the market for luxury goods, bypassing strict regulation. Therefore, the US authorities need to develop an additional set of laws, the expert says. She hopes that the Joe Biden administration, which has spoken out in support of the fight against corruption money, will give this issue significant attention..

Political Advisor to the Helsinki Congressional Commission Paul Massaro (Paul Massaro) notes that there are serious differences between the Republican and Democratic parties on many issues, but there is a bipartisan agreement on the fight against corruption money and its influence on politics in the United States..

If in the United States in the near future, a bill that ends the registration of anonymous companies is passed, which will allow to determine the final beneficiaries, this will be the first of “many subsequent bipartisan achievements in the fight against kleptocracy,” Paul Massaro hopes.

Expert of the “Atlantic Council” Ben Judah (Ben Judah) recalled during an online discussion that cities such as London, New York and Miami remain among the central places where foreign kleptocrats prefer to buy real estate. Despite the fact that the UK has introduced a number of bills that allow the authorities to require an explanation of the origin of funds when making large purchases and have access to the data of the ultimate beneficiaries of offshore companies, the implementation of these provisions today is not effective enough..

“We need to rethink the threats and fully embrace the financial threats of the 21st century as such,” he said, expressing hope that this issue will receive broader support under the Joe Biden administration..

The Trump administration has also taken anti-corruption actions on the international stage, but these have mainly focused on totalitarian state regimes: for example, last week, President Trump signed a decree barring Americans from investing in companies that support or supply the Chinese defense complex. Similar American sanctions are now also in effect against Russia and Iran..

  • Valeria Jegisman

    Journalist «Voices of America». Prior to that, she worked for international non-governmental organizations in Washington and London, in the Russian-language version of the Estonian daily newspaper “Postimees” and as a spokesman for the Estonian Ministry of Internal Affairs. Interests – international relations, politics, economics

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