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Western democracies have, for decades now, been open to finance and investment, seeking to capitalize on the benefits they bring. Gone are the capital controls that used to raise financial borders between allies, as finance brings investment, economic growth and employment opportunities.
But there’s another dimension to these financial flows that are willingly welcomed by Western countries, a dimension that was almost entirely ignored until the democratic world was forced to pay attention by Russia’s war of aggression on Ukraine — illicit finance.
The European Union has begun grappling with some of the criminal finance that has washed across the Continent, introducing successive anti-money laundering directives, adopting action plans and debating the future location of the bloc’s Anti-Money Laundering Authority. However, less obvious forms of dirty money — so-called “active financial measures” — have been undermining Europe’s political institutions, buying influence via the sponsorship of cultural and sporting events, and even seeking to sway the outcome of elections.
Put simply, after more than a decade of focus on strengthening systems and responses to criminal finance — a job that’s far from complete — Western democracies must fight to protect themselves from the influence of malign financial flows, strategic corruption and the broad weaponization of finance by adversary countries.
Consider the recent revelation by the United States State Department, alleging that Russia has covertly spent over $300 million along these lines since 2014. It has attempted to influence politicians in at least 24 countries across four continents, and targeted the heart of the EU by using Brussels “as a hub for foundations and other fronts that back far-right candidates,” taking advantage of Europe’s poor record in implementing financial crime standards. ...
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