Report: The Enablers Fueling Global Corruption and Building Violent Kleptocracies

Resource for reporting on international corruption:

Report Details How Bankers, Lawyers, and Accountants Enable Global Corrupt Networks

• Report Includes 16 Case Studies of Enablers and Methodologies
• Enablers of Violent, Rights-Abusing Kleptocracies Include Banks, Financial Institutions, International Professionals, and Inner Circles
• Governments and Private Sector Urged to Focus Attention on Enablers

September 21, 2022 (Washington, DC) – A new report by The Sentry details how behind-the-scenes professionals, including bankers, lawyers, and accountants, play a critical role in fueling global corruption. The report offers a checklist of urgent recommendations for governments and financial institutions to counter these actors’ dangerous impact, which includes devastating conflict and human rights violations.

The report, “Constructing Corruption: Identifying the Enablers Helping Build Violent Kleptocracies,” looks beyond borders and reviews how an array of often-overlooked operators, professionals, and insiders­ play an essential role in the illicit operations of violent kleptocracies and global corrupt networks.

Oliver Windridge, Senior Advisor to The Sentry and report author, said: “No violent kleptocracy works alone. Enablers—whether professional, banking, international, or insider—provide essential advice and support for self-enrichment and state theft. It is time for a concerted effort in both public and private sectors, and across the globe, to target these enablers with the imposition of impactful financial tools of pressure, to disrupt a lucrative industry that exists to benefit the very few, leaving the majority behind.”

The report spotlights 16 case studies to examine the profiles and negative impact of enablers, exposing their links to illicit financial flows and associated conflict and human rights abuses. Targeting enablers through financial tools of pressure and other policy actions can alter enablers’ cost-benefit calculations and remove them as essential allies in the construction and maintenance of violent kleptocracies.

The report presents commonalities and characteristics of enablers revealed through previous reporting from The Sentry, such as their ability to target countries with vast unexploited wealth, weak government structures, underlying corrupt practices, and conflict.

Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: “Because they are often able to hide behind the veneer of white-collar respectability, enablers have for too long escaped scrutiny for their role in furthering grand corruption and the looting of resources from developing nations. This must stop now. The US is today the top destination worldwide for ill-gotten gains. To have any credibility in fighting corruption abroad, the US must first act at home and pass the ENABLERS Act.”

Ian Gary, Executive Director of the Financial Accountability and Corporate Transparency (FACT) Coalition, said: “The Sentry’s new report is a powerful compendium of criminal and dubious conduct by those helping kleptocrats and their cronies around the world to move and hide assets. By quickly passing the ENABLERS Act, Congress would close a glaring loophole in the U.S. anti-money laundering regime and send a powerful signal to the rest of the world that the U.S. is serious about tackling illicit finance flows that undermine democracy.”

The US currently plays a significant negative role in facilitating the flow of illicit finance and the stashing of dirty money. To protect national security and effectively combat global corruption, as outlined in the 2021 US Strategy on Countering Corruption, greater attention needs to be paid by the US to the roles and activities of enablers.

John Prendergast, Co-Founder of The Sentry, said: “In order to seriously combat kleptocracy and the corruption and conflict on which they thrive, we must get serious about targeting the enablers that allow kleptocratic regimes to prosper. These enablers work directly for the corrupt elite, and their motivation is almost always financial, so the repercussions need to be aimed at where it hurts the most: their wallets. If the international community can make it financially and reputationally disastrous to service kleptocracies, then we get one significant step closer to ensuring these violent and repressive regimes cannot survive.”

Policy recommendations

The report provides recommendations on policy actions and a checklist for governments and financial institutions to apply when targeting enablers through financial tools of pressure. Both public and private sectors have a role to play in identifying vulnerable countries or regions, flagging the presence of enablers, and increasing due diligence to ultimately change the cost-benefit analysis for enablers and the kleptocratic leaders they serve.

Private sector

• Banks and other financial institutions should use the categories of enablers discussed to identify red flags and share typologies for the onboarding of new clients and the review of existing clients and their accounts, with a view toward enhancing due diligence checks.
• Banks and other financial institutions should increase their engagement with government, regional, and other public institutions to best identify the categories of enablers mentioned in this report with a view toward sharing intelligence, thereby ensuring that enablers are not able to move looted funds and profits.

• Banks and other financial institutions should adopt policies and processes that allow for clear lines of communication with civil society and journalists in order to act upon information relating to enablers.
• Professionals working in the legal, accountancy, and real estate sectors should similarly use the categories discussed to identify red flags both in client onboarding and in ongoing relationships. They should report suspicious activities to local financial intelligence units.

Public sector

• Government and regional bodies should prioritize and, when possible, fast-track the passage and adoption of legislation and regulatory action that targets the role of enablers.
• Government and regional bodies should use the categories of enablers mentioned in this report as a framework to identify countries that may be particularly susceptible to enablers, with a view toward the implementation of further pressure. For example, when one or more of the categories of enablers is known to operate in a country, this should trigger the deployment of financial tools of pressure.
• Governments and regional bodies should issue alerts or advisories focused on enablers that include real-world examples of the dangers of working and engaging with enablers in high-risk jurisdictions.
• The US, UK, EU, Canada, Australia, and other jurisdictions should prioritize applying targeted network sanctions via Global Magnitsky-style or other appropriate sanctions regimes against enablers, including those cited in the case studies above, who continue to assist kleptocratic leaders. Sanctions against enablers tend to be particularly effective given their access to the global financial system.
• The US, UK, EU, and other jurisdictions should increase the issuance of advisories and alerts focused on violent kleptocratic regimes and the enablers that benefit from them. Consideration should be given to enabler-specific advisories and alerts.
• Law enforcement agencies in the US, UK, EU, and other jurisdictions should prioritize the rising influence of enablers and their links to increased illicit financial flows and kleptocracy. Focused initiatives should be launched to investigate enablers’ modes of operations, and suitable law enforcement tools should be engaged to disrupt, investigate, and prosecute, when possible.
• Regulated professions—for example, lawyers and accountants—should, through appropriate bar and accountancy associations, launch kleptocracy-focused initiatives to work with and train members on the dangers posed by kleptocracies, the commonalities across countries, and the links between corruption, conflict, and human rights violations.
• Countries susceptible to the presence and influence of enablers should conduct transparent and open reviews of consultants, businesspersons, and advisors working at high positions within government to best determine and remove unwanted influences.

 

Read the full report: https://thesentry.org/reports/enablers-violent-kleptocracies

For media inquiries or interview requests, please contact Greg Hittelman, Director of Communications, [email protected]

 

About The Sentry

(Short descriptor for press use: “The Sentry, an investigative organization that tracks corruption”)

The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy.

Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you’ll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts.

Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice. Learn more at www.TheSentry.org.