Countering Kleptocracy: January 25, 2023

Understanding transnational kleptocracy as a vehicle for theft, repression, and democratic erosion…and how we can respond. If you enjoy this newsletter, forward it to a friend or share on social media so that others can subscribe.


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how kleptocrats are adapting to pushback by democracies // january 25

by Matthew T. Page, Carnegie Endowment for International Peace, and Jodi Vittori, Georgetown University

Russia’s invasion of Ukraine focused democracies’ attention squarely on the threat of transnational kleptocracy. Democracies reacted with speed and unity to sanction Russian oligarchs, freeze their assets, and introduce legislation to close opportunities for kleptocratic influence. Kleptocrats, however, did not sit idly by in the face of these unprecedented steps by democracies. In response, kleptocratic regimes refined their own tactics, finding new ways to weaponize corruption and fund corrosive enterprises with their ill-gotten gains.

As sanctions and enforcement mechanisms were developed, kleptocrats found ways to increase their access to the international financial system by funneling vast sums of money through “bridging jurisdictions.” These jurisdictions have strong links to the international financial and trade systems and act as important destinations and conduits for ill-gotten wealth. Because these jurisdictions are often strategically important to Western countries, pressuring them to stop acting as conduits for illicit finance and trade may require significant tradeoffs with other Western goals.

In the last decade, kleptocrats have also adapted to heightened scrutiny by increasing their use of anonymous shell companies, dark-money entities, proxy donors, surreptitious gifts, and promises of future consultancies or appointments to cultivate influence among political elites outside of their home countries.

Given its unyielding pace and serious strategic implications, kleptocratic adaptation is a threat that demands a stronger and more purposeful reaction. Yet, democracies’ current responses are anemic and ad hoc; they are hampered by outdated laws, inadequate regulations, substandard enforcement tools, and weak accountability mechanisms. In addition, many democracies have become entangled in global kleptocratic networks, mortgaging their institutional integrity and strategic stability for perceived economic and geopolitical gains. In failing to recognize and appropriately respond to kleptocracy, policymakers have jeopardized their own strategic interests and the broader rules-based international order.

A robust response to kleptocratic adaptation will require three core components.

First, democracy stakeholders must view kleptocracy as a top-order challenge. In many countries, lawmakers are reluctant to view it as a national security threat. Instead, it is often treated as a niche policy concern and, therefore, superseded by more traditional national security considerations. If democracies are to confront this challenge, corruption must figure more prominently in foreign and domestic policymaking strategies and be viewed as integral to national security.

Second, policymakers in rule-of-law settings must focus on kleptocratic-enabling locales abroad, especially “bridging jurisdictions.” Rather than sanctioning and marginalizing bridging jurisdictions, however, democracies continue to cultivate extensive economic, military, and diplomatic interactions with these countries due to their perceived strategic significance. Democratic governments will have to engage in difficult internal discussions, perhaps even considering rebalancing some relationships, in order to put a stop to bridging jurisdictions’ enabling behaviors.

Lastly, democracies must strengthen their defenses against kleptocratic networks’ corrosive effects. This effort will require changing kleptocrats’ cost-benefit analysis by increasing the financial, reputational, and personal risks they face, as well as neutralizing their enablers. To help them identify gaps in their defenses, democracies need to draw upon their considerable intelligence-gathering capabilities and better leverage the expertise and fact-finding capacity of civil society and independent media.

As international corruption networks evolve, so too must the countermeasures and safeguards that mitigate the damage they cause. Granted, the scope and scale of the policy progress needed to respond to kleptocratic adaptation effectively is significant. Yet, in light of the severe threat that kleptocratic adaptation poses, it is imperative that democracies rise to the challenge.

For more on this topic, be sure to read the Forum’s latest report, Kleptocratic Adaptation: Anticipating the Next Stage in the Battle Against Kleptocracy, by Matthew T. Page and Jodi Vittori or watch our virtual discussion featuring insights from the report authors as well as Larry Diamond.

Reputation laundering in academia

Funding from foreign malign actors is a persistent threat in higher education systems in the U.S. and U.K., according to a recent journal article by Alexander Cooley, Dr. Tena Prelec, and John Heathershaw. Kleptocrats and oligarchs use donations to launder their reputations, attempting to boost their image both internationally and at home. Evidence from a U.K. survey found that university due diligence procedures tend to be inadequate when it comes to preventing reputation laundering. For more on illicit funding within academia and thank tanks, check out the Forum’s report Reputation Laundering in the University Sector of Open Societies.


transnational kleptocracy in the u.k. and beyond

Follow the Money’s Moneytrails podcast featured Oliver Bullough, a British investigative journalist and author of Butler to the World. Bullough discusses how the financial sector facilitates illicit financial flows and how members of the British elite have enabled kleptocracy in the U.K. In a March 2022 report for the International Forum, Bullough elaborated on the growing threat that transnational kleptocracy poses to democracy and the importance of a unified, networked response among open societies.


financial activity of russian oligarchs in 2022

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) published an analysis of the financial activity of Russian oligarchs, political figures, and sanctioned individuals (read the full report here). Focusing on reports filed between March and October 2022, FinCEN identified tens of billions of dollars linked to suspicious or illicit activities. Trends showed that Russian oligarchs purchased high-value goods shortly before the invasion of Ukraine. These individuals also moved assets and money across borders when the invasion occurred, funneling a portion of these funds into democracies. These measures likely enabled oligarchs to conceal their funds and assets, and circumvent sanctions passed after the invasion of Ukraine.



A recent Foreign Policy article outlines how Russia and other sanctioned regimes are manipulating automatic identification systems (AIS) on commercial vessels, likely in an attempt to obscure the location of ships carrying sanctioned material. Repeated gaps in AIS data often indicate that ships are undertaking illicit actions, such as transporting weapons to Russia despite sanctions. In addition to subverting rule-of-law mechanisms, the manipulation of AIS data heightens the risk of collisions and could spark diplomatic incidents over maritime territory disputes.



In a recent report published by the George W. Bush Presidential Center, Jessica Ludwig explains how transnational kleptocracy props up global authoritarianism and outlines counterstrategies for democratic policymakers. Ill-gotten gains enable autocratic actors to line their pockets and consolidate their own power. The paper contains strategies for democracies to fight transnational kleptocracy. These recommendations include but are not limited to closing loopholes with which kleptocrats launder their money and reputations, sufficiently funding rule-of-law mechanisms, and providing support for investigative journalists focused on corruption and kleptocracy.



A recent investigative report by the ZAM-net Foundation shows how corrupt political figures often rely on violence and coercion to maintain their power and harass activists in sub-Saharan Africa. State actors target whistleblowers and activists investigating corruption by forging alliances with violent gangs to intimidate voters, using cybercrime laws to target opponents, and exploiting anti-money laundering legislation to block foreign funding for NGOs. Nevertheless, these coercive tactics were seemingly less effective in 2022, given the relative success of independent candidates in select elections.


Kleptocratic Networks in Angola: Two Steps Forward, One Step Back?” | Rafael Marques, International Forum’s Power 3.0 Podcast

Shell Game” | Charles G. Davidson, Journal of Democracy

Kleptocratic Adaptation: Anticipating the Next Stage in the Battle Against Transnational Kleptocracy | Matthew T. Page and Jodi Vittori
Read the Forum’s latest report on kleptocratic adaptation and the threat it poses to democracy. Be sure to also check out our virtual discussion on the topic, featuring Matthew T. Page, Jodi Vittori, and Larry Diamond.


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