We Must Go Further to Challenge Russia’s Disregard for International Norms

No qualms: President Vladimir Putin greets North Korean leader King Jong-un during the latter's visit to Russia in September 2023. Image: kremlin.ru / Wikimedia Commons / CC BY 4.0 DEED

Russia's persistent disregard for international norms requires a more robust response from the international financial community.

Russia has never been closer to the world’s most dangerous regimes and terrorist organisations. A recent report by RUSI describes the speed at which the Russian arms trade with North Korea has grown, highlighting just how close and dangerous the relationship between Russia and North Korea has become.

In exchange for armaments and munitions, Russia is suspected of providing technological aid for North Korean espionage and missile development programmes in direct violation of UN sanctions. Russia attacks Ukrainian civilians using North Korean munitions and in return enables North Korea to put more money and technological advances behind its threats to South Korea, Japan and the US. What began as posturing from Vladimir Putin and Kim Jong-Un has now grown into an unprecedented partnership between these two rogue states.

Budding Russo-North Korean relations are not an isolated incident – Russian cooperation with Iran has also risen to new heights. In pursuit of closer economic collaboration, Russian banks now support the transfer of funds to Iran. Russia also maintains an ever-increasing military partnership with Iran, exchanging fighter jets for drones and supporting Iranian nuclear ambitions. The Russian money and goods flowing into Iran’s coffers bolster the economic and military position of a globally recognised state sponsor of terrorism.

Russia is responsible for its own barrage of state-sponsored criminal cyber threats, not just in Ukraine but throughout the world. In the past two months alone, Russia has been accused of cyber attacks on the UK’s electoral commission, the official website of the British Royal Family, and the Polish rail network. The Russian crypto exchange Garantex was exposed very recently for processing funds linked to terrorist and criminal organisations and money laundering.

Not that this is Russia’s first or only foray into global criminal activity. Lest we forget, Russia admitted to funding the Wagner private military company out of its state budget in June, taking responsibility for the export of extortion, rape and mass murder across the globe. Nor does Moscow fund only Russian-based terrorist groups. Reports earlier this year revealed a budding alliance between Russia and Hizbullah, a globally recognised Lebanese terrorist group with ties to the murderous regime of Bashar al-Assad in Syria.

We Ukrainians are grateful to our allies for the decisive actions they have already taken. But we must understand that Russia continues in its attempts to up-end the integrity of the international financial system and sow chaos and destruction around the globe. The evidence is indisputable that Russia’s illicit activities threaten the international rule of law and global peace and security. Russia’s ever-increasing violations of international norms demonstrate that we must do more to counter these threats.

As Putin’s global war machine continues to ramp up, the eyes of the world will focus more acutely on the entities responsible for funding Russia’s atrocities

The good news is that there are options available to us.

Let’s start with the Financial Action Task Force (FATF), an intergovernmental group designed to counter global money laundering and terrorist financing, which is holding its latest plenary meeting in Paris this week. FATF suspended Russia's membership to prevent the Kremlin from influencing decision-making. The Egmont Group, the global collaboration of financial intelligence units, has also suspended Russia, cutting it off from an important source of financial intelligence provided by Egmont's Secure Web information exchange service.

Nonetheless, Russia continues to openly sponsor terrorism and build commercial and defence relations with UN-sanctioned and FATF-blacklisted states. FATF must acknowledge this reality and go one step further by escalating measures to counter the risks from Russia at its current plenary.

Individual states must also act by officially recognising Russia as a high-risk jurisdiction in their domestic legislation. This would unlock policy tools such as risk advisories and market guidance, just two of many regulatory options available to them.

Finally, businesses exposed to Russian entities or the Russian financial system should insulate themselves from risk by enhancing their due diligence procedures. With scrutiny of Russia’s actions on the rise, it will become even more essential for businesses to avoid unknowingly participating in money laundering or financing terrorism.

As Putin’s global war machine continues to ramp up, the eyes of the world will focus more acutely on the entities responsible for funding Russia’s atrocities. Businesses and policymakers must act now to ensure they stay on the right side of history.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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Igor Cherkaskyi

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