To the detriment of U.S. foreign policy, gaps in anti-money laundering regulations have enabled kleptocracy and in turn, strengthened authoritarianism, state failure, civil unrest, and social degradation across the world, notes a new analysis from the Hudson Institute’s Kleptocracy Initiative. Recent reports paint an alarming picture of Western financial entanglement with authoritarian states and build a framework for combatting kleptocracy while safeguarding Western democracies. But the U.S. anti-money laundering (AML) system is inadequate to its purpose, analysts Ben Judah and Belinda Li contend in Money Laundering for 21st Century Authoritarianism:
Worse still, the weaknesses of the United States’ anti-money laundering system are hardly unique, they contend. Most democracies operate systems which a similarly flawed, and authoritarian states and kleptocracies have no meaningful anti-money laundering systems whatsoever. The failure to build an effective twenty-first century anti-money laundering system has led to systemic collusion with kleptocrats.
Kleptocracy and authoritarianism are mutually supportive, says Heather A. Conley, director of the Europe Program at the Center for Strategic and International Studies (CSIS) and the author of The Kremlin Playbook: Understanding Russian Influence in Central and Eastern Europe. An authoritarian leader and his or her inner circle can secure state-owned and private assets through kleptocratic means, and kleptocratic means can secure control over key government and democratic institutions, she wrote for the National Endowment for Democracy’s International Forum for Democratic Studies.
The United States must be proactive, not reactive in its efforts to combat illicit finance from kleptocracies, say Judah and Li, who propose that Congress set up a bipartisan Joint Special Committee on Kleptocracy to assess the policy breakdown and propose recommendations, in parallel with a Kleptocracy Study Group to work with U.S. allies and share best practices. The aim of both the Joint Special Committee and the Study Group should be threefold:
- first, to find ways that existing U.S. legislation can be expanded so the legal, incorporation, and real estate sectors are given AML responsibilities;
- second, to examine the common methods used by kleptocrats and hostile regimes to launder their money and promote coordinated action among federal and state agencies to address key vulnerabilities; and….
- finally, to identify ways in which the existing AML structure must be both strengthened and updated in light of new technologies and globalization.
Join a discussion of Money Laundering for 21st Century Authoritarianism with Ben Judah, Raymond Baker, and Charles Davidson. Fri, December 1, 2017. 10:00 AM – 11:30 AM Add to Calendar
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