Ukraine is currently redefining our understanding of modern warfare. While the dominance of drones on the battlefield has garnered significant attention, Russia is employing a diverse range of tools beyond the front lines that require immediate attention. One of these tools is the threat posed by illegal finance.
The Role of Illegal Finance in the Ukraine War
The issue of dirty money in Ukraine is often associated with domestic corruption scandals. This emphasis is understandable, as these scandals can have devastating effects on the legitimacy of the Ukrainian government, public trust, and the country's international credibility. However, the role of illegal finance in Russia's aggression should not be overlooked.
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Russia's official defense doctrine considers finance as part of non-kinetic tools and an independent area of national security. This is clearly evident in Ukraine through illegal payments to saboteurs, the exploitation of "mules" (individuals used to transfer money from one party to another), and illegal exchanges used to move money from Russia.
Ukraine's Actions and the Need for International Cooperation
Ukraine is currently taking action against this threat. The country's 2022 risk assessment on money laundering has placed this issue in the context of Russia's military aggression. This recognition is reflected in practical realities, including the arrest of several Ukrainian citizens accused of collaborating with Russia and efforts to combat the financial infrastructure used to fund anti-Ukrainian activities.
At the same time, Ukraine still relies on powers designed to prevent physical counterfeiting while the country seeks to address the 21st-century threat of cryptocurrencies, which underpin many of Russia's subversive efforts. A draft bill is under consideration aimed at providing a legal and tax framework regarding virtual assets and cryptocurrencies in Ukraine.
Ukrainian security units, particularly the Security Service of Ukraine (SBU), play a crucial role in this regard. Although the SBU has demonstrated its effectiveness during the full-scale invasion, it currently lacks the necessary tools to address financial crimes.
Ukraine's international partners have typically focused on building the country's anti-corruption framework to create a more systematic response to Russia's financial threats. This cooperation could bring mutual benefits for Ukraine and its allies facing similar threats from Russia's illegal finance.
Overall, Ukraine could seek to adopt a more aggressive stance in the realm of illegal finance that goes beyond merely defending against Russian financial flows. This includes exploring options to undermine the ties of Russia's financial system.
Ultimately, Ukraine and its international partners must seriously consider whether they view illegal finance as a national security threat or merely as an internal anti-corruption issue or a matter to be managed in EU accession negotiations.
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