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Countering Russia's kleptocrats

The vast wealth that Russia's kleptocrats have amassed helped Putin tighten his grip on power. We are campaigning to hold them and their accomplices accountable.

Illustration showing two bright columns shining a spotlight on Russia's kleptocrats assets, such as yachts and private jets, and also the enablers in the West

Illustration: Prak Piakot, Transparency International

For more than two decades, corrupt officials and politically connected people in Russia have laundered vast amounts of money and parked their illicit gains abroad. In the wake of Russia’s invasion of Ukraine, we are campaigning to hold them and their accomplices to account, while demanding the fast-tracking of key anti-corruption reforms.

The problem

Since Russia’s attack on Ukraine, the international community is scrambling to deter President Vladimir Putin and his cronies, and to help end the military aggression as soon as possible. The response has been primarily focused on imposing a new wave of targeted sanctions in an effort to hold President Putin and complicit Russian elites accountable. But experience shows that such sanctions may quickly turn toothless, as authorities face significant difficulties in locating, identifying and freezing sanctioned individuals’ wealth.

Our solutions

Russian elites and their accomplices in the West must face consequences for Russia’s violent assault on Ukraine and the suffering they have brought upon its people. To make them pay, it is critical to go after the enormous wealth they have accumulated through corruption.

Effectively detecting and tracing their dirty money requires strong transparency measures, intelligence-sharing and cooperation among a diverse group of countries as well as an accountability-focused civil society. To prevent future suffering, decision-makers in advanced economies also need to urgently fast-track key anti-corruption policies.

  1. Identify and freeze the assets of corrupt officials and complicit elites. The interests and assets of Russian kleptocrats and political elites span many different countries. Effectively detecting and tracing these assets requires intelligence-sharing and cooperation among a diverse group of countries. To that end, the recently established transatlantic task force is a step in the right direction. The task force should: consider broadening its membership to include other key financial centres; map networks of nominees, proxies and family members; and utilise and share available data on company and asset ownership, suspicious transactions reports and others. In the future, the task force should evolve into an effective model to deal with cross-border corruption and hold kleptocrats to account everywhere.
  2. End anonymous companies. Establish central, public registers with verified information about the real owners of companies, including for foreign companies. Ensure information is available in open data formats.
  3. Increase transparency of trusts. Make it mandatory for trusts to be registered and disclose details of all connected parties in a publicly available register.
  4. Improve transparency and checks in the real estate sector. Companies investing in the real estate sector should be required to disclose their beneficial owners and this information should be available in a publicly accessible register. Businesses and professionals involved in real estate deals – such as real estate agents, lawyers and notaries – should be required to identify the beneficial owners of customers, screen for politically exposed persons, and report suspicious transactions to authorities. Supervision should be the responsibility of independent and well-resourced public agencies instead of self-regulatory bodies.
  5. Open the black box of hedge funds, private equity and other investment funds. Investment fund managers should be required to undertake checks on customers and report suspicious transaction to authorities. All beneficiaries of investment funds, the real natural persons who are the end-investors, should be accurately identified, disclosed and recorded in registers.
  6. Increase transparency in luxury goods ownership. Information about the real owners of yachts and private jets should be recorded by governments and disclosed to the public. Luxury goods dealers should conduct anti-money laundering checks.
  7. Ban golden passports and regulate golden visas. Citizenship-by-investment schemes – especially those on offer in the EU – should be phased out and any passports issued to Russian oligarchs under these programmes should be revoked. Residency-by-investment schemes should be regulated and adequate checks should be put in place.
  8. Hold professional enablers to account. Banks, corporate service providers, lawyers, accountants and real estate agents who have been enabling Russian oligarchs and other kleptocrats to set up companies, move suspicious funds and purchase assets should be held to account. Dissuasive sanctions should apply to firms and senior management.
  9. Strengthen mechanisms for seizing, confiscating and – eventually – returning assets. Going beyond sanctions, countries should ensure they have civil and criminal mechanisms to seize and confiscate assets – including, for example, unexplained wealth orders or non-conviction-based forfeiture – and eventually return these assets to the victims of corruption.
  10. Support civil society organisations, independent journalists, activists and whistleblowers. Especially in countries facing democratic decline or suffering from authoritarian kleptocracy, support for civil society and whistleblowers is essential to turn the tide. Countries should invest in programmes combining investigative journalism with civil society advocacy for systemic change and support anti-corruption fighters through learning exchanges, improvements to security protocols and use of diplomatic leverage to deter threats against them.

In a kleptocratic system such as today’s Russia, going after the elites can be meaningful. And while forceful and hard-hitting, sanctions against them do not always hurt as much as they are meant to, considering that targeted individuals usually conceal their money and influence.

What the West’s response to the assault on Ukraine should look like

To help put pressure on the international community, sign our petition and encourage others

📝 Join me in calling on Western leaders to take action against #Russia’s super-rich & their enablers. Sign @anticorruption’s urgent petition to #stopkleptocrats change.org/stopkleptocrats
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What is 'kleptocracy'?

Kleptocracy – literally meaning a “rule by thieves” – is a government where corrupt officials and connected individuals wield their power to embezzle and misappropriate public funds at a large scale, neglecting the people.

It is closely connected to grand corruption, which is an abuse of high-level power that benefits the few at the expense of the many.

How big of a problem is corruption in Russia?

Corruption is endemic in Russia, where people have been robbed of any opportunity to influence matters in their country. Public institutions in Russia are almost completely captured by the executive government, and as a result fail to hold power to account.

With a score of just 29 out of 100, Russia is the lowest scoring country in Europe and a ‘country to watch’ on Transparency International’s 2021 Corruption Perceptions Index.

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