Russia is threatened with exclusion from the international system of combating money laundering. The issue of Russia’s inclusion on the blacklist of the organisation in question – the FATF (Financial Action Task Force) – was considered at Ukraine’s request at a recent FATF session. The decision has not yet been made, but it may be postponed for a few months – until the winter session. At the same time, the system itself is far from perfect, as it can be used not only to stop the work of financial “laundry machines” or track the money flows of terrorist organisations, but also to persecute dissidents and human rights defenders in non-democratic countries. How does it work and what can be done about it?
The organisation responsible for collecting information for the FATF system in Russia is Rosfinmonitoring. Russia has been a member of the system since 2002. “A significant part of Rosfinmonitoring’s work is aimed at prosecuting people whom the Russian authorities perceive as their enemies or political rivals. These are opposition politicians, independent journalists, public opinion leaders, representatives of non-profit organisations,” Ilya Shumanov, head of the anti-corruption NGO Transparency International-Russia, said in a recent interview with Republic. “In the court case files of almost every foreign agent, there is evidence that gives the Ministry of Justice the right to say that the person received money from abroad. And these proofs come from Rosfinmonitoring.“
However, such practices are not only characteristic of the Russian regime, as the story of the Open Dialogue Foundation and its founder, Lyudmyla Kozlovska, demonstrates. She was turned against by three states whose not-so-liberal regimes managed to make her life in democratic and liberal Belgium unbearable. This was due to the holy of holies of the modern world order — the international legislation on combating money laundering and financing of terrorism. Autocrats, dictators and corrupt officials use it to persecute their opponents far beyond the borders of their countries. Lyudmyla Kozlovska dared to push for it to be reformed by collecting stories of victims from around the world.
“For human rights defenders and civil society, the abuse of international organisations is now critical,” she tells Radio Liberty. “I want to focus on the mechanism of AML/CTF (Anti-Money-Laundering and Counter-Terrorist Financing Ordinance). This is a key component of the persecution of dissenters by supranational and inter-state platforms. Security issues, counter-terrorism are key concepts. But what does it mean? The conventions and any legislation that is regulated in the framework of combating dirty money and terrorism, firstly, give states unrestricted access to information. Secondly, it becomes possible to work on legislation that regulates this process in a very short time and behind closed doors, without the participation of civil society. States ‘protect’ us, so they decide instead of us and without us what to do for our security.”
“In this field, any information systems for data exchange between states are opaque. And this becomes their weakness because many authoritarian regimes look for opportunities to abuse these mechanisms. And, surprisingly, democratic states here trust autocrats by default. Well, North Korea is an exception. There are plenty of examples of democracies and hybrid countries extraditing citizens to Russia even now, in times of war, or even considering such requests. And not only to Russia. China, African states, other countries where human rights are violated and where it is hard to believe that there is any justice at all, are seen as partners.
There are interstate conventions for the exchange of bank data under AML/CTF. This exchange takes place without the notification and conscious participation of the bank customer, even if he has been granted refugee status. And what the recipient state does with such information, no one checks. Because there is trust between countries in this area.”
– How does this mechanism work?
“Banking data, such as transaction data, is used to attack you, your donors and those you support financially — say, as a human rights organisation. Your team members, family members, even lawyers and accounting firms are targets of attacks. You are effectively behind a glass wall and have no defence mechanisms. It doesn’t matter what passport you have or what country you are in. I experienced this first hand. Three states were able to get my bank details, even though I live in democratic Belgium, in the heart of Europe. In addition, in a new country of residence, one may be subjected to “de-banking” — being excluded from the financial system.
Here’s one example. I am a human rights defender who is engaged in international activities. A few years ago, we invited the Moldovan opposition of the time, together with representatives of civil society, judges and journalists, to address the European Parliament and to participate in meetings with the European Commission. Subsequently, both the European Parliament and the European Commission supported our recommendations to define the conditions for granting macro-financial assistance to Moldova: to release all political prisoners, to comply with the requirements on the rule of law and international conventions. The former regime of oligarch Vladimir Plahotniuc was so furious about the loss of access to financial aid worth hundreds of millions of euros that it decided to remove and discredit us.
In 2016–2019 Moldova was labelled a “captured state” in the United States, the European Union and other democratic countries. The oligarch Plahotniuc controlled all branches of power. Together with the opposition and civil society in Moldova, we presented evidence of this to international organisations, the EU and the US, demanding that financial aid to Chisinau be stopped until political prisoners are released and international human rights treaties are respected. Plahotniuc’s attack on our Foundation started in 2018 as soon as international organisations followed our recommendations. Plahotniuc labelled me a threat to national security, as well as all the people I invited on behalf of the Foundation to the European Parliament and the European Commission for being persons related to me. He said that we had acted in the interests of Russia and wanted to undermine national security.
Based on these unsubstantiated accusations, the Moldovan law enforcement authorities sent a request to Belgium to access my bank data.”
– Have you been prosecuted under an anti-terrorist article?
“I do not know under which article I was prosecuted in Moldova, as the case was classified. We tried many times to get access to it, but we were refused. But publicly, representatives of the Moldovan authorities accused me of laundering dirty money of Russian oligarchs and spying for Russia. Then the government changed in Moldova, the General Prosecutor’s Office recognised the criminal case as politically motivated and closed it. Following this, the parliament apologised to me. But even after these decisions, I had no mechanisms to restore my right to receive financial services in Belgian banks, nor were there legislative mechanisms to force the banks to open accounts for me and our organisation.
Another method to financially isolate you is a smear campaign. To do this, all one has to do is spread a flood of misinformation against you in different languages in pseudo-media, social networks or through so-called guest articles, blogs on websites of real media. Search engines like Refinitiv World-Check Risk Intelligence will rely on these publications and classify you as a “risky customer” for financial institutions. Therefore, all institutions using Refinitiv’s services (or those collecting information about you online themselves) will automatically consider such allegations as grounds to close your accounts and disqualify you from receiving financial services. Or deny you audit services.
You can’t rent a flat, get insurance, open and own a bank account, or get a loan. You cannot apply for grants, because all intergovernmental institutions are guided by financial databases. And most importantly, you often don’t even know that you are on these blacklists, and you can’t remove yourself from them, because such a procedure simply does not exist. And if you try to do that, often structures like Refinitiv — it’s one of the biggest databases, in fact, there are a huge number of them — would say, okay, we’ll flag that you have reported this to us, but we’re not going to delete your data because it might be useful in terms of public interest. This means that no financial institution will work with you.”
- Refinitiv World-Check Risk Intelligence is, as I understand it, a commercial company that outsources services to the banking system?
“It is a completely independent financial analytics company. This company and similar ones collect data using artificial intelligence. All internet publications related to your name with the keywords already mentioned, as well as any accusations of corruption, financial fraud, human trafficking, paedophilia, etc. They claim that they scrutinise the information thoroughly. In reality, they don’t. You will spend years trying to whitewash your name on the internet, or basically be unable to do so, because these might be some strange sites that don’t list the owner or any contacts. They are simply indexed, so when you search on Google they are always at the top, but the real information about your business may be somewhere on the sixth or seventh page. This is how your e-identity is distorted: people see primarily negative information about you online. You can’t force Google to remove this from a search, because you don’t have the means to do so, and the search engine doesn’t have a clear procedure. You’ll just be ignored until you hire super-expensive lawyers. But where will you get the money for a lawyer if you get your accounts shut down?”
– How come such non-transparent procedures were possible in the first place?
“Today, this is how the recommendations of FATF, an intergovernmental organisation that develops global AML/CTF standards and assesses the compliance of national systems with them, are structured. It creates such a legal space for financial institutions and programmes like Refinitiv that they are not obliged to report the basis on which they made their conclusions. Because if they reported, they would supposedly be telling criminals how to whitewash themselves. It turns out that democratic states have created a completely closed non-governmental organisation for absolutely good purposes, the fruits of whose work are used by the whole world. Let me remind you that we live in a world where more than 80 per cent of countries are hybrid, authoritarian or totalitarian regimes.
The presumption of guilt is built into AML/CTF legislation. A priori, all agents are suspected of committing offences and must prove otherwise. That is why the bank’s compliance department [compliance with any internal or external requirements or norms – Editor’s note] is not obliged to report to you.”
– How did you end up being blacklisted?
“We were deprived of four bank accounts in Belgium. And in this country there are only four banks that can provide services to non-governmental organisations. They simply sent us a letter saying that our accounts were being closed and that we had a month to find a new bank and withdraw the money. Naturally, we could not open a new account. To open an account in another EU country, you have to go through a complete re-registration. You will actually have to move. But it is impossible to wander around all the time. Our lawyers warned us that if we stated this publicly, we would definitively ruin our reputation. But the situation was dire, we went to court and started to defend ourselves, we informed the members of the Belgian and European Parliament, the Parliamentary Assembly of the Council of Europe, the OSCE that we were being financially excluded for political reasons.”
– All these organisations have known you for a long time?
“We have been working with them for over 13 years. They knew us from our work on the reform of Interpol, the Schengen Information System, the protection of political prisoners, and the promotion of sanctions mechanisms. And then I came to them and said: ‘We have been deprived of the ability to function at all.’ We do not operate in cash, we pay all taxes, we comply with all legislative rules. It turns out that those who operate in a grey or black zone will survive, but if you are transparent and legal, you cannot withstand a blow, because your opponents know how to destroy you.
After hearing the case, the judge told us that the bank cannot be forced by law to open or renew our account because it is not obliged to do so — it is a private institution. But that’s not true! Banks are now fully regulated by governments. And it’s not the bank’s fault that it threw me out, because it has no other prospect but to remove customers like me. Propaganda in at least 20 languages is constantly being generated against me by different regimes. The bank will not spend money on me, a client who does not bring it any profit, but only moves back and forth a couple of thousand euros a month. I am one big expense for the financial institution. So no one intends to look into it, they just say goodbye.
This February, a law came into force in Belgium, drafted partly with our case in mind, on the provision of ‘bank of last resort’ services to public organisations, diplomats, persons associated with them and private companies. It is a response to a critical situation in which many Belgian residents and citizens are deprived of their right to financial services. Any of the four major banks can and should open such an account. Nevertheless, the banks go to various tricks to avoid taking risks and pass us around like a hot potato. For example, they invite me to come to them in person but do not confirm the meeting. All this time of endless attacks and financial isolation, we have been surviving only thanks to bitcoin.”
– Is this done only using smear campaigns on the Internet or are there other ways?
“They also fabricate criminal cases with charges from the same list. In this case, there is a request to Interpol, to the Schengen Information System, and as a consequence, you are deprived of your visa to the USA, the UK, anywhere. Our organisation has been promoting the Interpol reform campaign since 2013. We couldn’t comprehend the rampant speed, why Interpol was so easy to abuse. Since then, we have made significant progress in this regard. But the abuse continues. Key words from the security sector accelerate the flow of information through all channels. Interpol is secondary. The AML/CTF looms over it and all other organisations like an umbrella.”
– However, Belgium is not the first European country where you settled. You moved to Brussels to escape persecution in Poland.
“I came to Poland from Ukraine on a scholarship programme, and in 2009 I initiated the creation of the Open Dialogue Human Rights Foundation. Until 2015, Poland was an example of democratic transformation in the post-communist world. When Jaroslaw Kaczynski’s Law and Justice (PiS) party came to power, a gradual usurpation of power began there, and European institutions explicitly labelled Poland an “illiberal regime”. At one point, even political prisoners appeared in Poland. People were arrested completely arbitrarily, detained from several weeks to several months. Companies that did not want to participate in the regime’s corruption schemes were raided. They persecuted LGBT activists and those in favour of women’s rights, journalists and an independent judiciary. All of this we have documented and presented in the international arena. We have defended and are defending independent judges, lawyers, prosecutors, activists. The regime decided to punish me as an example, as one of the well-known Ukrainian women living in Poland at the time — look what can happen to a foreigner who speaks out against the government here.
In 2018, Poland also declared me a threat to national security, although I won a lawsuit in the Supreme Administrative Court proving that this was a completely illegal, arbitrary persecution. In 2019, we filed 20 defamation lawsuits and won seven of them. The others are still pending. We even won a legal battle with a former minister of Interior Affairs, now PiS’s campaign manager. He accused me of having links with Russian oligarchs, Russian and German special services, money laundering, and intentions to organise a “bloody Maidan”. The same was claimed by the pro-government media, which issued publications with accusations by high officials. We continue to fight, but many people are simply unable to win, and this is what the regimes take advantage of, because they think that no one will hold them accountable.”
– What third country has claims against you?
“There is still a problem with Kazakhstan. We waged an extensive campaign there to defend political prisoners and the opposition being persecuted outside Kazakhstan. This country is one of the leaders in inventing methods of persecuting opponents outside the country. In particular, they were the first to use the bank as a tool for transnational repression. They abused the AML/CTF interstate co-operation mechanisms in every available jurisdiction to persecute anyone associated with Kazakhstani oppositionist Mukhtar Ablyazov.
BTA Bank accused Ablyazov of embezzlement and money laundering. Immediately, the Prosecutor’s office and the Ministry of Internal Affairs of Kazakhstan fabricated a criminal case in hundreds of volumes and sent them to different jurisdictions. Imagine, a prosecutor sits in Germany or France and receives a hundred volumes in French and German — it’s a whole room of documents. It will take several years just to read them. The prosecutor thinks, ‘This is a nightmare, a person should be arrested just in case, another state would not write such a pile of documents in vain!’ And what is it worth for Kazakhstan to stamp them and send them to effectively neutralise, paralyse a person? To the USA, Canada, Great Britain, all the countries of the European Union, everywhere where there has been at least one related transaction with Ablyazov or people associated with him. In the same way as a request to Interpol makes it possible to arrest you everywhere, similarly, AML can use bank enquiries to create insurmountable problems for you in criminal and civil proceedings through the mechanisms of interstate interactions.”
– There is a collection of testimonies of victims of this system in different countries on your website. I was struck by the case of a Palestinian whose house was shelled because his bank details were accessed.
“Fadi Elsalamin is a US citizen and one of the most prominent anti-corruption activists in his home country. He investigated how the Palestinian authorities misappropriated funds intended for humanitarian aid. Because he was also a businessman; he had accounts set up in the State of Palestine. His bank details, his American and Israeli passport details were passed on to extremists from the Hezbollah group. The government of the State of Palestine, which has full control of the banks, is linked to this organisation. One day they drove up to his house and shelled it with mortars. Luckily, no one was killed because most of the dwellers were simply not home.
We know of another case in the State of Palestine, the case of Nizar Bonat, a leading opposition figure. He was murdered for demanding sanctions against those in the government responsible for corruptly misusing EU aid, just like Fadi. His brutal torture at the time of his arrest by secret police officers was captured on video.”
– Do you just collect these stories or are the people who share them with you your clients?
“They are not our clients. We document their cases to propose ways to reform legislation, guidelines, global AML standards. In order to have a reasoned dialogue with any MP from Germany or Italy, Finland or Sweden — the countries that are now shaping FATF policy — you need to have evidence. Our archive includes African countries, Afghanistan, Latin America, Eastern Europe, EU countries, the US, Canada, the UK. We did the same in the case of Interpol: at that time we had more than one hundred documented cases from different countries. We are grateful to everyone who agrees to share their story with us publicly or anonymously. All the more so now that everything is going towards having all our information in one place: insurance, medical, financial, educational — any aspect of life.”
– Ukraine also opened a criminal case against you, following Poland. Are you still being prosecuted in any countries now?
“The so-called criminal case in Ukraine is yet another example of a smear campaign organised with the help of pseudo-anti-corruption organisations. The Court of Ukraine declared the information posted in 2018 on the website stopcor.org in a publication about the so-called ‘open criminal case of the special services of Ukraine’ against me to be ‘inaccurate and degrading the plaintiff’s honour, dignity and business reputation’. The court also obliged exactly the organisation Stop Corruption to pay me moral compensation in the amount of 50 thousand hryvnias and to keep a refutation posted on its website for 10 days from the moment the decision came into legal force. At the moment I am not aware of any criminal prosecution in other countries, but any of the regimes with which I have a conflict can open a case in three minutes. Another example is the use of alleging a threat to national security as censorship. Since July 2022, the Uzbek government has sought the removal of my publications and Open Dialogue Foundation reports that expose mass shootings and torture in Karakalpakstan in 2022, again citing ‘threat to national security’. Fortunately, Twitter [now called X — Editorial’s note] refused to remove our publications.”
– How limited are your activities now?
“We continue our work as a human rights organisation. The Schengen zone is open to me, but I do not go to Poland, nor also to Hungary, which has no issues with me, but I understand that the regime there co-operates with Russia, Poland and several other countries.”
In October this year, elections were held in Poland, during which opposition parties won the majority of seats in parliament and declared their readiness to form a new government. The political process is not over yet, and it is too early to say whether the Open Dialogue Foundation’s problems will continue in the country.
Radio Free Europe requested comments from FATF and Refinitiv, the organisations criticised by the human rights defender, but had yet to receive a response at the time of publication of this article.
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