International crimes, such as war crimes, crimes against humanity, genocide, and the crime of aggression, often combine violence and profit. Some, like looting or using slave labor, have an inherent economic dimension. Others, like intentional killings of civilians, can be a prelude to widescale economic exploitation of seized territories or resources. In short, international crimes are big business – yet hardly ever treated as such.
The global anti-money laundering regime—the international framework requiring governments and institutions to detect, report, and disrupt illicit financial flows—emerged in the late 1980s as a response to drug dealing. Since then, it has been brought to bear against an ever-increasing range of “predicate crimes,” i.e. the underlying offenses that generate illicit proceeds, such as human trafficking, the illegal wildlife trade, and child sexual exploitation. The “follow the money” methods are tried and tested, and it is past time to capitalize on them in the pursuit of accountability for international crimes.
The Business of War Crimes
International crimes are typically complex and coordinated, involving multiple perpetrators. For instance, crimes against humanity by definition entail a “widespread or systematic” attack against civilian population. This means they need to be funded and resourced, creating a financial footprint.
They can also generate profit, sometimes in a manner that fuses commercial and political motivations. A series of “industrialist” trials at Nuremberg concerned the activities of major German industrial conglomerates embedded within the Nazi war machine. In its judgment against officials of IG Farben, the chemical company that had supplied poison gas to concentration camps, the Tribunal wrote that “Farben marched with the Wehrmacht and played a major role in Germany’s program for acquisition by conquest.”
Today’s equivalents of IG Farben also march with invading armies; fund atrocities; sell off lands and properties acquired by conquest; and profit off contracts to “rebuild” razed cities. Russia’s war against Ukraine offers a stark illustration, as we detail in a recent report.
The mass theft of Ukrainian grain by Russian state-owned and private enterprises requires “a sophisticated and coordinated logistical effort” – a criminal public-private partnership. The same is true of the “reconstruction” of Mariupol, a program of de facto population replacement interspersed with opportunities for corruption. And, while the Russian government was the principal bankroller of the Wagner Group up until its absorption by the Ministry of Defense, multiple Russian companies fund other private military companies operating in Ukraine.
The economic footprint of international crimes is especially visible in Ukraine, but by no means a new phenomenon. Organizations such as The Sentry have been calling for action on these issues for years, as well as some academics. In theory, their words have found warm reception: for instance, the International Criminal Court (ICC) has described “stronger financial investigations and asset recovery as vital” to its mandate. In practice, the ICC has not yet prosecuted anyone involved in funding or profiting from international crimes, nor has it been able to identify any substantial assets owned by those against whom it has issued reparations orders. The ICC would do well to revive the approach of Nuremberg’s industrialist trials, which recognized that economic complicity in atrocities warrants criminal accountability.
Anti-Money Laundering Response
Crucially, governments need not wait for the ICC. There is much that can, and should, be done to combat the business of war crimes at the domestic level. All this requires is subjecting international crimes to the same financial scrutiny as any other serious crime.
The fundamentals of the international anti-money laundering regime are laid out in recommendations published by the Financial Action Task Force (FATF), an international policy-making body that sets international anti-money laundering, counter-terrorist financing and counter-proliferation financing standards. Among other things, they require that countries criminalize money laundering; that financial institutions and certain other regulated businesses identify and report their customers’ suspicious activities; that financial investigation be effectively integrated into investigating serious crime; and that proceeds and instrumentalities of crime be subject to confiscation.
An essential part of these efforts is law enforcement agencies, regulators and the private sector working together to develop a shared understanding of illicit finance threats. This includes figuring out what money laundering schemes look like (“typologies”) and what indicators might alert one to a potential money laundering scheme (“red flags”), as well as developing intelligence on specific individuals or companies involved.
Often this work requires high-level buy-in. For example, financial flows related to online child sexual exploitation look very different from those involved in drug trafficking. To ascertain typologies and red flags involved, governments and regulated businesses need to focus their attention on particular “predicate offenses” that generate illicit proceeds and disseminate the results of their analysis.
The methodologies for undertaking and disseminating such analysis are well-established. For example, the FATF’s report on child sexual exploitation brings together knowledge from across member states to provide case studies and lists potential transactional indicators, including small transaction amounts (between EUR 10-200); geographic patterns (payments from developed to certain developing countries); personal profiles (age differences between payers and recipients); timing of transactions (late night or early morning payments). Similar analysis has been undertaken for many other crimes, including human trafficking, trade crime, the illegal wildlife trade and more, all with their own typologies and red flags.
There are promising signs of this type of analysis being carried out in connection with international crimes. In 2020, the UK’s National Crime Agency published an advisory, known as an “amber alert,” on illicit finance risks relating to the conflict and corruption in South Sudan. The amber alert listed 23 red flags, such as companies with joint South Sudanese and foreign beneficial ownership operating across government-controlled industries such as mining, oil, and construction.
For now, this is one of the very few examples of this type of work being done in the context of international crimes. More could be done. For example, while most of the companies involved in funding or profiting from Russia’s international crimes will be incorporated in Russia, some will seek to move money internationally, primarily via shell companies or other proxies. Governments could usefully develop and disseminate typologies and red flags that would help detect such activity, such as jurisdictions involved, the timing of incorporation, profiles of directors and shareholders, and transaction patterns and amounts.
Like so many other forms of crime that have attracted a coordinated anti-money laundering response, international crimes wreak suffering on victims and whole communities, while enabling profiteering by those who bear the greatest responsibility for atrocities. Whether these financial flows pass through global business hubs, and how they can be detected, is an urgent question.
Answering this question requires primarily not legal reform, but political will and commitment of resources. There may be benefits to specifically designating international crimes as predicate offenses, but the acts involved will almost inevitably be criminal in any event because they involve murder, torture, theft, or the like. The challenge lies in identifying what the resulting financial flows look like and pulling collective knowledge and resources together to detect them.
The Role of Sanctions
One might assume that sanctions already address this need. The global sanctioning coalition comprising the United States, U.K., European Union and other governments have sanctioned hundreds of Russian officials, military figures and businesspeople. These sanctions include the designations of those allegedly involved in selling stolen grain, funding private military companies, and otherwise financially profiting from or supporting Russia’s war.
This is a useful first step, but we must acknowledge the limitations of sanctions. While sanctions target known bad actors, anti-money laundering controls cast a wider net—requiring financial institutions and other gatekeepers to flag suspicious transactions regardless of whether the parties have been designated. Furthermore, those sanctioned are unlikely to hold assets in their own name. Therefore, effectively implementing sanctions requires identifying sanctioned persons’ proxies and nominees. However, most sanctions compliance only involves superficial “sanctions screening” that can solely detect direct interactions with sanctioned persons. This means that even such simple evasion techniques as holding property via friends, family members, or other associates can sometimes frustrate sanctions enforcement.
In short, without denying the utility of sanctions, they must not be mistaken for a comprehensive response to financial involvement in international crimes. One should also bear in mind that sanctions implementation capabilities vary dramatically. For instance, while EU sanctions are adopted centrally, their practical implementation lies within each member state’s purview, with varying levels of resourcing and competence.
Need for Action
In consultations with practitioners, policymakers, and academics in Canberra, Brussels, The Hague, and London that we held last year, a consensus emerged: vigorous action is needed against the finances of war crimes across all domains, including international criminal law responses, anti-money laundering controls and sanctions.
Since then, we have distilled these discussions into a set of Principles on Accountability for Economic Complicity in International Crimes and a High-Level Roadmap. These documents, which have garnered endorsements from leading experts and institutions, outline priority actions for governments seeking to close the accountability gap, including:
1. States should direct their anti-money laundering regulators to develop and disseminate typologies specific to the proceeds of international crimes — the way they already do for drug trafficking, human trafficking, corruption, terrorist financing, and other forms of organized crime
2. Financial investigation should be embedded in domestic and international investigations of all international crimes, so that tracing the money is treated as a core investigative task, not an afterthought.
3. Targeted financial sanctions should be used vigorously in response to credible evidence of economic complicity in international crimes. Their use should be a first step towards, not a substitute for, criminal prosecutions and asset confiscation.
4. International and regional bodies — including the FATF and the EU’s Anti-Money Laundering Authority — should make the identification and recovery of proceeds from international crimes a stated priority and provide guidance and support to domestic efforts.
Conclusion
Most would agree that those who fund international crimes or profit from them should be held to account, and that their ill-gotten wealth should be effectively confiscated. These ideas are not novel, and “follow-the-money” approaches have become central to tackling a wide array of organized criminal activity, from drug trafficking to corruption. It is striking, then, that anti-money laundering responses have been consigned to the periphery of international criminal justice up until now.
As our research demonstrates, more should be done internationally as well as domestically. The ICC needs to deliver on its promise of effectively identifying and seizing war criminals’ assets for reparations. International organizations, such as the FATF, and domestic governments alike should bring the formidable force of anti-money laundering controls to bear against the finances of war crime.
Despite the current shortcomings, the right tools exist. The legal frameworks are largely in place. What has been missing is the political will to treat war profiteers with the same seriousness as drug traffickers. If governments are serious about accountability for atrocities, they must start following the money.
FEATURED IMAGE: Gavel and a globe (via Getty Images)
Great Job Anton Moiseienko & the Team @ Just Security for sharing this story.
