ANALYTICS ANTI CORRUPTION

Covert Foreign Money: Financial Loopholes Exploited by Authoritarians to Fund Political Interference in Democracies

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Executive Summary

In addi­tion to more wide­ly stud­ied tools like cyber­at­tacks and dis­in­for­ma­tion, author­i­tar­i­an regimes such as Russia and China have spent more than $300 mil­lion inter­fer­ing in demo­c­ra­t­ic process­es more than 100 times span­ning 33 coun­tries over the past decade. The fre­quen­cy of these finan­cial attacks has accel­er­at­ed aggres­sive­ly from two or three annu­al­ly before 2014 to 15 to 30 in each year since 2016.

We call this tool of for­eign inter­fer­ence “malign finance,” defined as “the fund­ing of for­eign polit­i­cal par­ties, can­di­dates, cam­paigns, well-con­nect­ed elites, or polit­i­cal­ly influ­en­tial groups, often through non-trans­par­ent struc­tures designed to obfus­cate ties to a nation state or its prox­ies.” A typ­i­cal case involves a regime-con­nect­ed oper­a­tive fun­nel­ing $1 mil­lion to a favored polit­i­cal par­ty, although buy­ing influ­ence in a major nation­al elec­tion costs more like $3 mil­lion to $15 million.

Rather than start our analy­sis by focus­ing on any giv­en pol­i­cy area, we review open-source report­ing in 16 lan­guages to iden­ti­fy malign finance cas­es cred­i­bly attrib­uted to for­eign gov­ern­ments. Finding that approx­i­mate­ly 83 per­cent of the activ­i­ty was enabled by legal loop­holes, we cat­a­logue the result­ing case­load into the sev­en most exploit­ed pol­i­cy gaps.

Breakdown of loop­holes through which author­i­tar­i­an regimes secret­ly fun­nel mon­ey into demo­c­ra­t­ic politics

Broader than just mon­ey flow­ing through straw donors, shell com­pa­nies, non-prof­its, and oth­er con­duits, malign finance includes a range of sup­port mech­a­nisms inno­vat­ed by author­i­tar­i­an regimes to inter­fere in democ­ra­cies, from intan­gi­ble gifts to media assis­tance. As such, pol­i­cy strate­gies to address these vul­ner­a­bil­i­ties are not lim­it­ed to cam­paign finance reforms, but also include greater trans­paren­cy require­ments around media fund­ing, cor­po­rate own­er­ship, cam­paign con­tacts with for­eign pow­ers, and oth­er issues.

In addi­tion to iden­ti­fy­ing loop­holes, our case study informs the scope of our rec­om­mend­ed pol­i­cy solu­tions, which are meant close off chan­nels for for­eign finan­cial inter­fer­ence with­out infring­ing upon the speech rights of domes­tic polit­i­cal spenders or jeop­ar­diz­ing bipar­ti­san sup­port. Each of our rec­om­men­da­tions bal­ances these trade-offs dif­fer­ent­ly based on empir­i­cal, legal, polit­i­cal, and admin­is­tra­tive con­sid­er­a­tions vet­ted in con­sul­ta­tion with more than 90 cur­rent and for­mer exec­u­tive branch offi­cials, Congressional staffers from both par­ties, con­sti­tu­tion­al law schol­ars, and civ­il soci­ety experts.

This report is orga­nized around each of the sev­en U.S. legal loop­holes that need to be closed, start­ing with the most urgent pri­or­i­ties, plus an eighth chap­ter on the need for stronger gov­ern­men­tal coordination.

  1. Broaden the def­i­n­i­tion of in-kind contributions

Legal def­i­n­i­tions of polit­i­cal dona­tions are too nar­row­ly scoped in many coun­tries, effec­tive­ly legal­iz­ing some for­eign in-kind con­tri­bu­tions. Examples include loans to Marine Le Pen’s par­ty from banks con­trolled by Russian leader Vladimir Putin and his prox­ies, lux­u­ri­ous gifts and trips paid for by Russian oli­garchs in Europe and Chinese United Front oper­a­tives in Australia, and black-mar­ket ser­vices pro­vid­ed by Kremlin instru­men­tal­i­ties.1 U.S. President Donald Trump invit­ed for­eign sup­port in two con­sec­u­tive pres­i­den­tial elec­tions, enabled by a nar­row read­ing of the U.S. pro­hi­bi­tion against for­eign nation­als con­tribut­ing any­thing of val­ue.2

The term “thing of val­ue” should be more broad­ly defined, inter­pret­ed, and enforced, such that it unam­bigu­ous­ly includes intan­gi­ble, dif­fi­cult-to-val­ue, uncer­tain, or per­ceived ben­e­fits. The most robust form this change could take would be new leg­is­la­tion, although a sim­i­lar result could be achieved by the Department of Justice (DOJ) and Federal Election Commission (FEC) enforc­ing exist­ing law more broadly.

  1. Report cam­paign con­tacts with agents of for­eign powers

Authoritarian regimes send inter­me­di­aries on secret mis­sions to enrich favored donors, politi­cians, or par­ties, as demon­strat­ed by oper­a­tions on four dif­fer­ent con­ti­nents. Nine elite Russian expa­tri­ates who donat­ed to the U.K. Tories are named in the clas­si­fied annex of a par­lia­men­tary report on Russian threats to British democ­ra­cy.3 Zhang Yikun, a leader in China’s United Front work, is impli­cat­ed in mul­ti­ple cas­es of fun­nel­ing mon­ey to New Zealand polit­i­cal par­ties and can­di­dates.4 Yevgeny Prigozhin, Putin’s go-to oli­garch for deni­able hybrid war­fare oper­a­tions, offers pack­age deals—including back­packs of cash, tai­lor-made news out­lets, troll farms, and armed forces—to help the Kremlin’s pre­ferred African lead­ers and pres­i­den­tial can­di­dates obtain and hold on to pow­er.5 The U.S. Department of Justice indict­ed George Nader, an American advi­sor to the ruler of the United Arab Emirates, for alleged­ly fun­nel­ing more than $3.5 mil­lion to the 2016 cam­paign of Hillary Clinton in order to gain access to and influ­ence with the can­di­date and then use that to gain favor with, and poten­tial finan­cial sup­port from, the U.A.E.6

U.S. cam­paigns should have to report to law enforce­ment offers of assis­tance from for­eign pow­ers. Legislation like the SHIELD Act would require that type of report­ing, although Congress should con­sid­er remov­ing the exemp­tion for con­tacts with for­eign elec­tion observers, clar­i­fy­ing a broad def­i­n­i­tion of agents, cov­er­ing big donors, and more nar­row­ly scop­ing it toward non-allied coun­tries to avoid clos­ing off space for benign for­eign rela­tions.7

  1. Outlaw anony­mous shell com­pa­nies and restrict sub­sidiaries of for­eign par­ent companies

Foreign gov­ern­ments and their oper­a­tives use cor­po­rate enti­ties, sim­i­lar to their usage of human straw donors, as footholds to estab­lish a legal presence—and thus the abil­i­ty to donate—within tar­get coun­tries. This prob­lem is most per­va­sive in the Anglo-American finan­cial sys­tem, which offers deep asset mar­kets, secure prop­er­ty rights, and the abil­i­ty to incor­po­rate with­out iden­ti­fy­ing own­ers. For exam­ple, Lev Parnas and Igor Fruman used an anony­mous Delaware shell com­pa­ny to hide con­tri­bu­tions fund­ed by elite Russian busi­ness­men, while a web of London-based enti­ties tied to Kremlin-con­nect­ed oli­garch Dmytro Firtash have donat­ed to numer­ous British politi­cians.8

Legislation like the Anti-Money Laundering Act of 2020 would out­law anony­mous shell com­pa­nies by forc­ing U.S. firms to report their true (ben­e­fi­cial) own­ers to the Treasury Department.9 This infor­ma­tion would be held secure­ly and con­fi­den­tial­ly, dis­closed only to sup­port law enforce­ment inves­ti­ga­tions. While shell com­pa­nies are by far the most impor­tant cor­po­rate vul­ner­a­bil­i­ty, Congress should also take tar­get­ed steps to tight­en restric­tions on polit­i­cal activ­i­ty by U.S. sub­sidiaries of for­eign par­ent com­pa­nies, such as mak­ing CEOs cer­ti­fy com­pli­ance or block­ing dona­tions by firms sub­stan­tial­ly owned by nation­als of adver­sar­i­al coun­tries. However, this sub­sidiary loop­hole has most­ly been exploit­ed for cor­rupt com­mer­cial motives rather than geopo­lit­i­cal oper­a­tions meant to weak­en tar­get societies.

  1. Disclose for­eign donors to non-profits

Foundations, asso­ci­a­tions, char­i­ties, reli­gious orga­ni­za­tions, and oth­er non-prof­its are handy vehi­cles for malign finance because Western legal sys­tems treat them as third par­ties per­mit­ted to spend on pol­i­tics with­out mean­ing­ful­ly dis­clos­ing the iden­ti­ties of their donors. For exam­ple, far-right par­ties in Europe such as Alternative for Germany, the Freedom Party in Austria, and the League in Italy each have non-prof­it con­duits that can chan­nel for­eign mon­ey into elec­tions.10 Russia secret­ly funds non-prof­its serv­ing as bespoke fronts to exe­cute spe­cif­ic man­dates, like a Dutch think tank cam­paign­ing against a Ukrainian trade deal with the European Union, a Delaware “adop­tions” foun­da­tion lob­by­ing against sanc­tions on Russia, envi­ron­men­tal groups oppos­ing U.S. hydraulic frack­ing, and a Ghanaian non­prof­it employ­ing trolls pre­tend­ing to be African Americans.11 Lastly, non-prof­its have been used as vehi­cles for elite cap­ture, such as bribery run through CEFC China Energy, Firtash’s use of his British Ukrainian Society to influ­ence elites in London, and Russian secret agents and mon­ey laun­der­ers work­ing to cul­ti­vate top U.S. politi­cians through the National Rifle Association.12

Legislation like the DISCLOSE Act would require U.S. non-prof­its that advo­cate for a clear­ly iden­ti­fied polit­i­cal can­di­date to pub­licly dis­close the iden­ti­ties of their donors, whether they are for­eign or domes­tic.13 We also pro­pose leg­is­la­tion more tar­get­ed toward malign finance, avoid­ing pub­lic dis­clo­sure require­ments for domes­tic “dark mon­ey” groups. It would require all U.S. non-profits—whether they spend on pol­i­tics or not—to report the iden­ti­ties of all their fun­ders to law enforce­ment, while only hav­ing to pub­licly reveal their for­eign fun­ders. Compared to the DISCLOSE Act, this pro­pos­al would include 501(c)(3) char­i­ta­ble orga­ni­za­tions, exclude cor­po­ra­tions, iden­ti­fy ben­e­fi­cial own­ers, include forms of income beyond just dona­tions, and require report­ing of finan­cial audits.

  1. Disclose online polit­i­cal ad buy­ers and ban for­eign purchases

Russia, China, Iran, and oth­er for­eign pow­ers con­tin­ue to buy polit­i­cal ads on social media plat­forms in order to covert­ly influ­ence elec­tions and pub­lic opin­ion in demo­c­ra­t­ic soci­eties.14 These secret ad cam­paigns are often legal because online ads are not sub­ject to the same dis­clo­sure rules and for­eign restric­tions applic­a­ble to print and broad­cast media.

A bill like the Honest Ads Act would require pub­lic dis­clo­sure of the sources of pay­ment for online polit­i­cal ads, sim­i­lar to rules that have long applied to tra­di­tion­al ad medi­ums.15 Legislation like the PAID AD Act would expand the for­eign source ban to apply to ad pur­chas­es at any time, not just the peri­od when U.S. buy­ers are reg­u­lat­ed a month or two before elec­tions.16 It would fur­ther pro­hib­it for­eign gov­ern­ments from buy­ing issue ads in elec­tion years to influ­ence the elec­tion. Those types of rules around ad pur­chas­es should extend to ben­e­fi­cial own­ers, while pro­hi­bi­tions like the PAID AD Act could be lim­it­ed to adver­sar­i­al countries.

  1. Disclose for­eign fund­ing of media outlets

The cut­ting edge of Russian inter­fer­ence appears to be the inter­sec­tion of malign finance and infor­ma­tion manip­u­la­tion, includ­ing covert fund­ing of online media out­lets. European intel­li­gence ser­vices see the Kremlin’s hand behind finan­cial and con­tent sup­port for at least six far-right news web­sites in Sweden, thou­sands of short-lived “junk web­sites” in Ukraine, and pur­port­ed­ly inde­pen­dent local news out­lets based in Berlin and the Baltics.17 Investigative jour­nal­ists have scru­ti­nized U.S.-based fringe inter­net news sites sus­pect­ed of receiv­ing for­eign fund­ing, but have not found defin­i­tive answers because their finances are well-kept secrets and no dis­clo­sure is required.18

U.S. tech­nol­o­gy com­pa­nies should have to main­tain pub­licly acces­si­ble “out­let libraries,” sim­i­lar to the “ad libraries” required by Honest Ads except that they would man­date dis­clo­sure of the ben­e­fi­cial own­ers who fund online media out­lets using inter­net ser­vices pro­vid­ed by U.S. tech­nol­o­gy com­pa­nies. Similar to how U.S. banks are employed to enforce sanc­tions and are respon­si­ble for col­lect­ing and ver­i­fy­ing ben­e­fi­cial own­er­ship infor­ma­tion, the legal oblig­a­tion to oper­ate these pro­posed out­let libraries should fall to U.S. web host­ing providers, domain reg­is­trars, search engines, adver­tis­ing tech­nol­o­gy firms, and social net­work plat­forms. Online media out­lets want­i­ng to use these ser­vices would need to pro­vide tech com­pa­nies with the iden­ti­ties of their funders—including equi­ty own­ers, adver­tis­ers, and donors—for inclu­sion in the library. Covered out­lets should include news orga­ni­za­tions whose web­sites receive more than 100,000 unique month­ly vis­i­tors or social media engage­ments while exclud­ing pub­licly trad­ed com­pa­nies and oth­er out­lets already required to dis­close own­er­ship. The scope could be fur­ther lim­it­ed to out­lets receiv­ing at least 10 per­cent of their finan­cial sup­port from abroad and require dis­clo­sure only of those for­eign funders.

For tra­di­tion­al media out­lets, Congress should require the FCC to again pro­hib­it for­eign-owned com­pa­nies from acquir­ing more than 25 per­cent of U.S. broad­cast licens­es or at least give Congress a chance to over­rule allowances. Lawmakers should require pub­lic dis­clo­sure when for­eign agents like Sputnik and RT seek time on U.S. air­waves and clar­i­fy on-air dis­claimers so that lis­ten­ers know when they are hear­ing pro­pa­gan­da spon­sored by the Russian gov­ern­ment rather than just receiv­ing an hourly attri­bu­tion to some par­ent cor­po­ra­tion that most Americans have nev­er heard of.

  1. Ban cryp­to-dona­tions and report small donor iden­ti­ties to the FEC

In order to con­ceal finan­cial flows into Western pol­i­tics, author­i­tar­i­an regimes have shown an intent to exploit two emerg­ing tech­nolo­gies offer­ing anonymi­ty. First is the threat of polit­i­cal spend­ing in the form of cryp­tocur­ren­cies, a medi­um of exchange that Russian mil­i­tary intel­li­gence mined, acquired, laun­dered, and spent on its 2016 hack-and-dump infra­struc­ture because it is eas­i­er to keep off the radar of U.S. author­i­ties.19 Second is the risk of donor bots capa­ble of automat­ing thou­sands of polit­i­cal con­tri­bu­tions in the names of stolen iden­ti­ties, keep­ing such oper­a­tions under wraps by cap­ping dona­tions at the $200 dis­clo­sure thresh­old.20

Donations and polit­i­cal ad pur­chas­es in the form of cryp­tocur­ren­cies should be com­plete­ly pro­hib­it­ed. Small donor dis­clo­sures require more nuanced han­dling. Campaigns, par­ties, and super PACs should have to report small donor iden­ti­ties to the FEC, which should make the infor­ma­tion pub­licly acces­si­ble through a secure, lim­it­ed, and con­di­tion­al gat­ing process. Any mem­ber of the pub­lic request­ing access to the data should have to com­plete a secu­ri­ty check and com­mit to not pub­licly dis­sem­i­nate or mis­use per­son­al infor­ma­tion. This would deter stalk­ers, snoops, and oth­er bad actors from abus­ing the data while enabling inves­tiga­tive jour­nal­ists, watch­dogs, and aca­d­e­mics to ana­lyze it for pat­terns of pos­si­ble straw donor schemes.

  1. Coordinate across the exec­u­tive branch and reform the FEC and Treasury

A par­tic­u­lar­ly aggres­sive 17 per­cent of malign finance cas­es do not oper­ate pri­mar­i­ly through legal loop­holes. Examples include Russian oil prof­its ear­marked to fund the League in Italy and var­i­ous United Front bribery and straw donor schemes.21 When author­i­tar­i­an regimes are caught break­ing the law in ways that involve large sums of mon­ey, that bold­ness is often reflec­tive of broad­er mul­ti-vec­tor influ­ence cam­paigns autho­rized at the high­est levels.

U.S. admin­is­tra­tive respons­es to for­eign inter­fer­ence cam­paigns need to be sim­i­lar­ly sup­port­ed by the pres­i­dent and coor­di­nat­ed “in a sweep­ing and sys­tem­at­ic fash­ion.”22 The Alliance for Securing Democracy has rec­om­mend­ed appoint­ing a for­eign inter­fer­ence coor­di­na­tor at the National Security Council, cre­at­ing a Hybrid Threat Center at the Office of the Director of National Intelligence, and estab­lish­ing oth­er avenues for coor­di­na­tion.23 We explain how eco­nom­ic depart­ments and agen­cies should feed into these coor­di­nat­ing bod­ies, how the FEC needs struc­tur­al reform to over­come par­ti­san grid­lock, and how Treasury should reor­ga­nize to ded­i­cate as much admin­is­tra­tive pri­or­i­ty to fight­ing author­i­tar­i­an influ­ence as it does to com­bat­ting ter­ror­ist financing.

Global surge of malign finance

Most cas­es of malign finance we iden­ti­fy over the past 10 years occurred in the sec­ond half of the decade: 78 per­cent since 2016 and 92 per­cent since 2014. We are con­fi­dent this marks a true acceleration—rather than the West sim­ply pay­ing more attention—because of detailed report­ing on region­al strate­gic influ­ence cam­paigns approved by heads of state. Putin autho­rized cam­paigns against Europe in 2014, the United States in 2016, and Africa in 2018.24 Chinese leader Xi Jinping ele­vat­ed United Front work in 2014 and 2015, which has pri­mar­i­ly tar­get­ed the Asia-Pacific but also extend­ed to sup­port the Belt and Road Initiative as far west as the Czech Republic and Africa.25

The largest region­al con­cen­tra­tion of malign finance involves Russia tar­get­ing Europe, which rep­re­sents about half of the activ­i­ty in our study. That is why U.S. intel­li­gence and law enforce­ment offi­cials have tra­di­tion­al­ly seen for­eign polit­i­cal fund­ing as a more press­ing chal­lenge for Europe than the United States.26 That sense of safe­ty is now gone, how­ev­er, with U.S. offi­cials warn­ing in ear­ly 2020 that Russian inter­fer­ence in the U.S. elec­tion could not only reprise the 2016 tac­tics of dis­in­for­ma­tion and cyber­at­tacks but also intro­duce covert finan­cial sup­port to polit­i­cal can­di­dates or cam­paigns.27 Indeed, our case study reveals that the most com­mon tar­get of malign finance—hit more than 25 times—is the United States.

Groundwork for sweeping policy overhaul

The last time the United States faced an emerg­ing threat of civ­il infra­struc­ture con­vert­ed into asym­met­ric weapon­ry, the adversary’s arse­nal did not include dirt on oppo­nents, straw donors, shell com­pa­nies, non-prof­its, ads, media out­lets, or emerg­ing tech­nolo­gies. Rather, it was air­planes fly­ing into buildings.

Over the sev­en weeks fol­low­ing 9/11, among oth­er respons­es, the U.S. gov­ern­ment enact­ed the most sweep­ing over­haul in a gen­er­a­tion to its anti-mon­ey laun­der­ing laws, start­ed reor­ga­niz­ing exec­u­tive branch agen­cies and func­tions around com­bat­ting ter­ror­ist financ­ing, and per­suad­ed 30 coun­tries to impose sim­i­lar finan­cial secu­ri­ty pro­tec­tions.28 One rea­son why U.S. pol­i­cy­mak­ers were ready to hit the ground run­ning was that Congress—having seen the Russia mafia laun­der­ing bil­lions through New York—spent the pre­vi­ous two years inves­ti­gat­ing how for­eign finan­cial insti­tu­tions exploit loop­holes in the U.S. finan­cial secu­ri­ty archi­tec­ture in order to for­mu­late bipar­ti­san pol­i­cy solu­tions.29

The United States has failed to sim­i­lar­ly for­ti­fy its finan­cial defens­es since malign finance and oth­er tools of elec­tion inter­fer­ence became top nation­al secu­ri­ty threats in 2016, although some pre­lim­i­nary pol­i­cy devel­op­ment work has begun. About half of the reforms we rec­om­mend mir­ror or build upon leg­is­la­tion already intro­duced in Congress, like the SHIELD Act, AML Act, DISCLOSE Act, Honest Ads Act, PAID AD Act, and FEC struc­tur­al reforms in H.R. 1, even if in some cas­es we pro­pose mod­i­fi­ca­tions to bills like these to ensure their scope tar­gets the malign activ­i­ty observed in our sur­vey.30 The oth­er half of our rec­om­men­da­tions are split among exec­u­tive branch coor­di­na­tion, some straight­for­ward statu­to­ry amend­ments, and five new­ly devel­oped pro­pos­als: broad­en­ing the def­i­n­i­tion of a “thing of val­ue,” requir­ing all non-prof­its to pub­licly dis­close for­eign fun­ders, cre­at­ing “out­let libraries” to iden­ti­fy ben­e­fi­cial own­ers, improv­ing rules for tra­di­tion­al media, and man­dat­ing small donor report­ing. These pro­pos­als would require some pub­lic debate and draft­ing work that should begin now in order to be ready when a polit­i­cal win­dow opens. At the same time as we work to put our own finan­cial secu­ri­ty house in order, the United States should lead the democ­ra­cies of the world to pro­mote an open, trans­par­ent, and secure are­na for polit­i­cal finance.

Our hope is that the com­pre­hen­sive empir­i­cal research pro­vid­ed in this report on finan­cial loop­holes exploit­ed by author­i­tar­i­an regimes to fund polit­i­cal inter­fer­ence in democ­ra­cies will jump­start a pol­i­cy reform ini­tia­tive to build resilience against this threat. There is no time to lose. Just like air­planes in the sum­mer of 2001 and cyber­at­tacks in the sum­mer of 2016, the sys­tem is cur­rent­ly blink­ing red about incom­ing rubles and yuan.

Please click the link to the right to read the rest of the report.

Access the pol­i­cy brief PDF here.

Please click here to view a short intro­duc­to­ry video on the project.

  1. See The Alliance for Securing Democracy and C4ADS, Illicit Influence—Part One—A Case Study of the First Czech Russian Bank, Washington, December 28, 2018; Antton Rouget et al., “La vraie his­toire du finance­ment russe de Le Pen,” Mediapart, May 2, 2017; Fabrice Arfi, et al., “La Russie au sec­ours du FN : deux mil­lions d’euros aus­si pour Jean-Marie Le Pen,” Mediapart, November 29, 2014; Anton Shekhovtsov, Russia and the Western Far Right, 1st ed., London: Routledge, 2017,  pp. 196–197; Anna Henderson and Stephanie Anderson, “Sam Dastyari’s Chinese dona­tions: What are the accu­sa­tions and is the crit­i­cism war­rant­ed?” ABC, September 5, 2016;  Damien Cave, “Australia Cancels Residency for Wealthy Chinese Donor Linked to Communist Party,” The New York Times, February 5, 2019;  Sam Jones, “Russia case caus­es headache for Swiss law enforce­ment,” Financial Times, June 5, 2020; Samer al-Atrush, “How a Russian Plan to Restore Qaddafi’s Regime Backfired,” Bloomberg, March 20. 2020; Roman Badanin, et al., “Coca & Co.: How Russia secret­ly helps Evo Morales to win the fourth elec­tion,” Proekt, October 23, 2019; Gabriel Gatehouse, “German far-right MP ‘could be absolute­ly con­trolled by Russia’,” BBC, April 5, 2019;  Special Counsel Robert S. Mueller, Report on the Investigation into Russian Interference in the 2016 Presidential Election, U.S. Department of Justice, March 2019, Vol. I, pp. 44–57 (“Mueller Report”). The United Front is the arm of the Chinese Communist Party that co-opts and neu­tral­izes sources of poten­tial oppo­si­tion through sub­ver­sion of Chinese orga­ni­za­tions and per­son­ages around the world. See Alexander Bowe, China’s Overseas United Front Work: Background and Implications for the United States, Washington: U.S.-China Economic and Security Review Commission, August 24, 2018, pp. 3–4.
  2. See Mueller Report, Vol. I, pp. 49, 185–188, 188–191; United States House of Representatives, Permanent Select Committee on Intelligence, The Trump–Ukraine Impeachment Inquiry Report, Washington, December 2019, pp. 98–103 (“Trump–Ukraine Report”); Devlin Barrett, et al., “Trump offered Ukrainian pres­i­dent Justice Dept. help in an inves­ti­ga­tion of Biden, memo shows,” Washington Post, September 26, 2019; Josh Dawsey, “Trump asked China’s Xi to help him win reelec­tion, accord­ing to Bolton book,” Washington Post, June 17, 2020.
  3. Tom Harper and Caroline Wheeler, “Russian Tory donors named in secret report,” The Times, November 10, 2019.
  4. Sam Hurley, “National Party dona­tions case: SFO alleges ‘trick or strat­a­gem’ over two $100k con­tri­bu­tions,” NZ Herald, February 18, 2020; John Anthony et al., “Chinese busi­ness­man Yikun Zhang’s dona­tions go beyond Simon Bridges,” Stuff, October 17, 2018; Anne-Marie Brady, “Magic Weapons: China’s polit­i­cal influ­ence activ­i­ties under Xi Jinping,” 2017, Paper pre­sent­ed at The cor­ro­sion of democ­ra­cy under China’s glob­al influ­enceArlington, VA, September 16–17, 2017, Washington: Wilson Center, 2017.
  5. See Neil MacFarquhar, “Yevgeny Prigozhin, Russian Oligarch Indicted by U.S., Is Known as ‘Putin’s Cook’,” The New York Times, February 16, 2018; Ilya Rozhdestvensky, et al., “Master and Chef: How Russia inter­fered in elec­tions in twen­ty coun­tries,” Proekt, April 11, 2019; Ilya Rozhdestvensky and Roman Badanin, “Master and Chef: How Evgeny Prigozhin led the Russian offen­sive in Africa,” Proekt, March 14, 2019.
  6. Indictment, United States v. Andy Khawaja, George Nader, et al., No. 1:19-cr-00374 (D.D.C., November 7, 2019), Doc. 1, pp. 6, (“Khawaja–Nader Indictment”); David D. Kirkpatrick and Kenneth P. Vogel, “Indictment Details How Emirates Sought Influence in 2016 Campaign,” The New York Times, December 5, 2019. Nader and his straw donors con­spired to cause four polit­i­cal com­mit­tees sup­port­ing Clinton “to unwit­ting­ly file false cam­paign finance reports con­ceal­ing these unlaw­ful cam­paign con­tri­bu­tions from the FEC and the pub­lic by false­ly stat­ing that the con­tri­bu­tions were made by [the straw donors] when in real­i­ty they were fund­ed by Nader.”
  7. United States Congress, H.R.4617 – SHIELD Act, intro­duced October 8, 2019.
  8. See Indictment, United States v. Lev Parnas, Igor Fruman, et al., No. 1:19-cr-725 (S.D.N.Y. October 9, 2019), Doc. 1, pp. 5–10 (“Parnas–Fruman Indictment”); Greg Farrell, et al., “Rudy Giuliani Sidekick Lev Parnas Traces Part of Money Trail to Ukraine,” Bloomberg, January 23, 2020; Benoît Faucon and James Marson, “Ukrainian Billionaire, Wanted by U.S., Builds Ties in Britain,” The Wall Street Journal, December 2, 2014.
  9. United States Congress, S.Amdt.2198 to S.4049 – AML Act, sub­mit­ted June 25, 2020. An ear­li­er ver­sion of this leg­is­la­tion was called the ILLICIT CASH Act.
  10. See Organization for Security and Co-oper­a­tion in Europe (OSCE), Germany, Parliamentary Elections, 24 September 2017: Final Report, November 27, 2017, pp. 6; Lobby Control, Geheime Millionen und der Verdacht ille­galer Parteispenden: 10 Fakten zur intrans­par­enten Wahlkampfhilfe für die AfD, Cologne, September 2017; Süddeutsche Zeitung, “Strache-Video,” 2019–2020; Oliver Das Gupta, et al., “Was außer Spesen noch gewe­sen ist,” Süddeutsche Zeitung, May 16, 2020; Thomas Morley and Etienne Soula, “Caught Red Handed: Russian Financing Scheme in Italy Highlights Europe’s Vulnerabilities,” The Alliance for Securing Democracy, July 12, 2019.
  11. See Zembla and De Nieuws BV, “Baudet and the Kremlin,” YouTube video, 48:41, April 25, 2020; Clarissa Ward, et al., “Russian elec­tion med­dling is back — via Ghana and Nigeria — and in your feeds,” CNN, April 11, 2020; Emma Loop, et al., “A Lobbyist At The Trump Tower Meeting Received Half A Million Dollars In Suspicious Payments,” Buzzfeed, February 4, 2019; James Freeman, “What Did Hillary Know about Russian Interference?” The Wall Street Journal, July 10, 2017.
  12. See United States Attorney for the Southern District of New York, “Patrick Ho, Former Head Of Organization Backed By Chinese Energy Conglomerate, Sentenced To 3 Years In Prison For International Bribery And Money Laundering Offenses,” Press Release, March 25, 2019; Sergii Leshchenko, The Firtash octo­pus: Agents of influ­ence in the West, Vienna: Eurozine, September 25, 2015; Statement of Offense, Plea Agreement, United States v. Mariia Butina, No. 1:18-cr-218 (D.D.C. December 13, 2018), Doc. 67, pp. 1–5 (“Butina Plea Agreement”).
  13. United States Congress, S.1147 – DISCLOSE Act, intro­duced April 11, 2019. The DISCLOSE Act would apply to cor­po­ra­tions, LLCs, labor unions, 527 orga­ni­za­tions, and tax-exempt enti­ties orga­nized under sec­tion 501© of the tax code, except for 501(c)(3) char­i­ties because they are pro­hib­it­ed from spend­ing on elections.
  14. See, e.g., Ward, 2020; Facebook, “Taking Down More Coordinated Inauthentic Behavior,” August 21, 2018; David Gilbert, “China’s Been Flooding Facebook With Shady Ads Blaming Trump for the Coronavirus Crisis,” Vice, April 6, 2020.
  15. United States Congress, S.1356 – Honest Ads Act, intro­duced May 7, 2019.
  16. United States Congress, H.R.2135 – PAID AD Act, intro­duced April 8, 2019.
  17. See Jo Becker, “The Global Machine Behind the Rise of Far-Right Nationalism,” The New York Times, August 10, 2019; Anatoliy Bondarenko, et al., “We’ve got bad news,” Texty, November 28, 2018; Bradley Hanlon and Thomas Morley, “Russia’s Network of Millennial Media,” The Alliance for Securing Democracy, February 15, 2019; Holger Roonemaa and Inga Spriņģe, “This Is How Russian Propaganda Actually Works In The 21st Century,” Buzzfeed, August 29, 2018.
  18. See, e.g., Brian Lambert, “The mys­tery of MintPress News,” MinnPost, November 11, 2015; Luke O’Brien, “Who Gave Neo-Nazi Publisher Andrew Anglin A Large Bitcoin Donation After Charlottesville?” Huff Post, June 12, 2019.
  19. Indictment, United States v. Netyshko, No. 1:18-cr-215 (D.D.C. July 13, 2018), Doc. 1, pp. 21–24 (“Netyshko Indictment”).
  20. See, e.g., Paul Wood, “Andy Khawaja: ‘the whistle­blow­er’,” The Spectator, February 24, 2020.
  21. See Alberto Nardelli, “Revealed: The Explosive Secret Recording That Shows How Russia Tried To Funnel Millions To The ‘European Trump’,” Buzzfeed, July 10, 2019; SDNY, 2019; Angus Grigg, “Huang Xiangmo’s big night of gam­bling,” Financial Review, December 12, 2019; Hurley, 2020.
  22. See Mueller Report, Vol. I, pp. 1.
  23. Laura Rosenberger et al., The ASD Policy Blueprint for Countering Authoritarian Interference in Democracies, Washington: The Alliance for Securing Democracy, June 26, 2018, pp. 22–23.
  24. See Fiona Hill and Clifford G. Gaddy, Mr. Putin: Operative in the Kremlin, 2nd ed., Washington: Brookings, 2015, pp. 303–311; Shekhovtsov, Chapters 6–7;  U.S. Office of the Director of National Intelligence, Background to “Assessing Russian Activities and Intentions in Recent US Election”: The Analytic Process and Cyber Incident Attribution, Washington, January 6, 2017; Rozhdestvensky and Badanin, 2019; Rozhdestvensky, et al., 2019.
  25. See Bowe, pp. 3–6; Brady, pp. 7.
  26. As of ear­ly 2016, U.S. intel­li­gence agen­cies were focused on Russian clan­des­tine fund­ing of European par­ties. See Peter Foster and Matthew Holthouse, “Russia accused of clan­des­tine fund­ing of European par­ties as US con­ducts major review of Vladimir Putin’s strat­e­gy,” The Telegraph, January 16, 2016. Even after the 2016 elec­tion, the Mueller report con­clud­ed that Russia’s two prin­ci­pal oper­a­tions against the United States were dis­in­for­ma­tion and cyber­at­tacks, with the inves­ti­ga­tion not seem­ing to have exhaus­tive­ly fol­lowed the mon­ey. See Mueller Report, Vol. I, pp. 1; Josh Rudolph, “Congress Should Follow the Money Like the British Parliament,” The German Marshall Fund of the United States, July 31, 2020.
  27. In a February 2020 memo to the states, U.S. offi­cials warned of three pos­si­ble offline Russian tac­tics not seen in 2016, all fit­ting with­in our def­i­n­i­tion of malign finance: finan­cial sup­port to can­di­dates or par­ties, covert advice to polit­i­cal can­di­dates and cam­paigns, and the usage of eco­nom­ic or busi­ness levers to influ­ence a cam­paign or admin­is­tra­tion. See Eric Tucker, “US: Russia could try to covert­ly advise can­di­dates in 2020,” AP News, May 4, 2020.
  28. See Juan Zarate, Treasury’s War: The Unleashing of a New Era of Financial Warfare, New York: PublicAffairs, 2013, ch. 1–4.
  29. See Elise J. Bean, Financial Exposure: Carl Levin’s Senate Investigations Into Finance and Tax Abuse, New York: Springer, 2018, pp. 66–80.
  30. SHIELD ActAML ActDISCLOSE ActHonest Ads ActPAID AD Act; United States Congress, H.R.1 – For the People Act of 2019, passed March 14, 2019.

Josh Rudolph Fellow for Malign Finance, Alliance for Securing Democracy

Thomas Morley Research Assistant, Alliance for Securing Democracy

Please vis­it orig­i­nal source Alliance for secur­ing democracy 

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