Russian President Vladimir Putin poses an active and open threat to democracies worldwide. This may make him international Kleptocrat #1. He uses corruption and coercion to steal public assets from his own citizens, his government, and other countries where he maintains strong influence.
These ill-gotten gains allow Putin to fund his assault on democracy. Experts on Putin’s stolen wealth estimate his assets fall between $100 and $200 billion, money that is hidden behind a maze of offshore ownership structures tied to his closest family and friends. When these cronies get overthrown by pro-democracy, anti-corruption movements — as in Ukraine — we see just how far Putin will go to protect his power.
Like other corrupt officials, traffickers, tax dodgers, and criminals around the world, Putin and his fellow kleptocrats require one thing: stable but opaque, ask-no-questions financial systems where they can hide, grow, and protect their assets. The U.S. financial system serves to enable Putin’s network and other corruption networks all around the world.
The problem doesn’t stop with profit. We already know that Putin and his cronies work very hard to “weaponize corruption” abroad. Once they’ve established ways to secretly move money through a country’s financial system, the next step is to begin targeting people who are close to power in that country with the goal of influencing policy.
The good news is, things are starting to change. Over the last few decades, our federal government has implemented important reforms to the U.S. banking sector to prevent kleptocrats from using our financial system to launder their money.
But there are still plenty of loopholes in U.S. anti-money laundering policies. For example, financial advisors in a variety of industries, from private investment funds to luxury goods retailers, are not required to find out who the real investors are behind the purchases and investments they make for clients. They’re not even required to report suspicious activity to law enforcement.
This problem has been spotlit several times over the last few years, from a 2020 leaked FBI report citing a “reliable source” that alleged a New York private equity firm’s links to Russian organized crime, to a Senate report that same year showing how sanctioned Russian oligarchs had lawyers create anonymous shell companies in the U.S. that traded in high-end art, to the 2021 Pandora Papers link detailing over 200 U.S.-based trusts with assets linked to people or companies publicly accused of fraud, corruption, or human rights abuses.
We know that kleptocrats want to use corrupt, illicit flows of wealth to influence U.S. policy, and we know they’re using U.S. financial professionals to help them. That’s why it’s critical our elected representatives take the steps necessary to stop this process — now.
- Empower the Treasury to expand the number of U.S. financial actors that require anti-money laundering checks of their clients, including those investing in real estate, luxury goods, trusts, and private investment funds.
- End the practice of anonymously-owned shell companies in the U.S.
- Make it much harder for U.S. citizens to serve as covert conduits of foreign malign influence in the U.S.
- Strengthen the capacity of law enforcement to investigate, prosecute, and adjudicate money-laundering, illicit financial flows, and malign influence by foreign actors.