The Enablers: Dirty Money In "Clean" Countries

The Enablers: Dirty Money In "Clean" Countries

If money is laundered in a forest and no one is around to see it, is it still a crime? Yes, of course, it is. But more than that, you can't launder money in a forest, or anywhere else, without banks or other financial institutions willing to do the dirty work. And according to a new EU report seen by the Financial Times, a number of those banks are located within the European Union.


Recent big time scandals in Europe include, for example: the Latvian bank that bankrolled the North Korean nuclear program; the $8.3 billion in allegedly suspicious money from the former Soviet Union that flowed through the tiny Estonian branch of Danske Bank in a single year; and the $10 billion in Russian cash that Deutsche Bank laundered via “mirror trades" (which won the firm a fine of $640 million).

And of course it will surprise precisely no one to hear that over the past 10 years the London property market has soared to dizzying highs on cash infusions from corrupt leaders and business people with ties to the Middle East, Africa, and Russia. Earlier this year, British lawmakers launched an investigation into the matter, though chiefly in the context of growing tensions with Russia after the poisoning of a former KGB officer in the UK.

In fairness, Europe has particular challenges when it comes to stamping out dirty money. As the EU report seen by the FT points out, oversight bodies are understaffed, and regulation is decentralized. In a common economic bloc of 28 countries where regulatory supervision and enforcement varies, the EU's ability to tackle illicit money flows is only as good as the convictions of its weakest members. The Baltics and the Balkans stand out as particularly porous entry points for dirty money, but a report last year found that in two-thirds of EU countries firms are too lax in flagging suspicious cash. There have been calls for a centralized authority to not only assess how banks run, but also what they run. A single clearing house for oversight, information-sharing, and enforcement would obviously be a good step.

Until then, here's something to bear in mind: When we write about corruption, we often look chiefly at the countries where kickbacks and graft are a way of life. We cite the well-known Transparency International rankings that tell us that corruption is rife across much of Africa, the former Soviet Union, Latin America, and Asia – and that Russia and Mexico are the two most corrupt of the world's large economies. We rightly criticize leaders who enable, encourage, and thrive in these systems. And we write about how graft shapes voters and elections around the world.

But the point is that corruption thrives in “dirty" countries in no small measure because of financial institutions and banks in “clean" countries that are willing to play ball. It's good to shed light on corrupt actors, but the enablers of corruption are often closer to home than you might think.

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Ian Bremmer shares his insights on global politics this week with a look at the deteriorating human rights situation in Belarus, Delta variant woes, and Lebanon one year after the Beirut blast.

An Olympian refuses to return home to Belarus and an anti-Lukashenko activist has been found dead in Ukraine. What's going on?

Yeah. That anti-Lukashenko activist was found hanged in a park in Kiev. Once again, not exactly likely a suicide. These anti-Lukashenko activists have a way of turning up injured or dead. It's a horrible regime. Their friends are limited largely to the Russians. That's about it. The economic pressure is growing from Europe, from the United States, very coordinated. But the problem is a very hard to do much to Lukashenko when he has not only support of his military, but also the support of most of the workers in the country who aren't prepared to strike because they want to ensure they still have jobs. I expect this is going to continue, but human rights abuses are stacking up. It is nice to see that the Americans and the Europeans are coordinating policy as well as they have been.

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It's been 365 days since twin blasts at a Beirut port decimated Lebanon's capital. More than 200 people were killed and some 7,000 were injured, yet accountability has been scarce. There is ample evidence that multiple Lebanese officials knew that ammonium nitrate was being improperly stored at the port. Four high-ranking politicians, including former PM Hassan Diab, have been charged by a Lebanese judge, but they all refuse to cooperate with the ongoing investigation.

Since then, Lebanon's already-dire economic and financial crises have only intensified. The Lebanese pound, the national currency, has plummeted, losing 90 percent of its value since 2019, when the country's economic crisis erupted. And more than 50 percent of the population is now living below the poverty line.

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The Biden administration is finally devoting more attention to Southeast Asia. Last week US Secretary of Defense Lloyd Austin traveled to Singapore, Vietnam, and the Philippines, marking the first regional visit by a Biden cabinet official. A trip by Vice President Kamala Harris is already in the works as well, and this week Secretary of State Tony Blinken will meet (virtually) with ASEAN counterparts.

The flurry of activity comes after earlier concerns that President Joe Biden was neglecting Southeast Asia, the region where US-China rivalry is the most intense. To understand better what Austin's visit meant, and what comes next, Eurasia Group's lead Southeast Asia analyst Peter Mumford spoke to us from Singapore.

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Raisi won't have it easy: The newly "elected" president of Iran, Ibrahim Raisi, was officially endorsed by Supreme Leader Ali Khamenei on Tuesday. In his inaugural address, the 60-year-old hardliner pledged to get US sanctions removed and to respond to rising socioeconomic grievances within Iran, but he warned that he wouldn't lash Iran's prosperity or survival to "the will of foreigners." In Iran, the president's role focuses mainly on domestic policy, but with the economy reeling one of Raisi's big early challenges will be to continue complicated talks with the Biden administration to renegotiate the 2015 nuclear deal, which would lead to the US lifting some of the harshest sanctions. Both sides say they want a new deal, and have gone through half a dozen rounds of negotiations already, but they remain at odds over who should make what concessions first. Raisi also pledged to restore Iranians' flagging trust in their government and to improve the economic situation, but in ways that are in line with "revolutionary principles." He'll have his hands full with that. And don't forget that the likely imminent (re)takeover of neighboring Afghanistan by the Taliban — whom Tehran don't like at all — will also occur on Raisi's watch. Good luck, Mr. President, you'll need it.

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158: To boost vaccination rates, New York City will soon require proof of COVID vaccination or a negative test to enter gyms and restaurants, as daily new infections in the Big Apple have jumped 158 percent over the past two weeks due to the more contagious delta variant. New York is the first major US city to take this step, following similar schemes already in place in France and Italy.

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