Thread by @jfriedlanderdc

How does the #Kremlin and the #Putin inner circle launder money? Short answer: just like the rest of us. #Russia uses the Western financial world as an element of its own power. But it's worth reviewing why this is before we cheer on the #sanctions brigade in the US and UK. A 🧵

Deep and internationalized #capital #markets are an element of Western power. By drawing global finance to #NewYork or #London, we make ourselves indispensable to global trade and investment. Use our #Dollar anywhere if you abide by its rules. This is why the yuan cannot compete.

The same market liberalization that has led to global prosperity with the US and the West at its center. But the same rules that make it easy to open your family business apply to anyone opening a "family business." You selling cookies and the Russians sell state assets.

But as @anders_aslund and I have argued, Russians aren't just avoiding taxes like your everyday scofflaw, they are systematically using Western capital to strip Russia of its wealth and hide money--for and from each other.
atlanticcouncil.org/in-depth-resea…

This makes the US and UK victims of their own success. Common law allows for trusts, blind trusts, and obscure financial arrangements. Much of what the Kremlin does is--actually-- perfectly legal. Our laws have become our own #NationalSecurity threat.

What should be due diligence and domestic #Financial regulation has become #ForeignPolicy. Sanctioning oligarchs is nice symbolism, but what it is. The proof is in the implementation. Combatting #moneylaundering should turn everyone into Nancy Drew.

It takes priority from the top: the judiciary will prosecute. That will mobilize law enforcement, regulators, intelligence services, and the private sector to work together. Or else it's sand falling through your fingers. Just talking tough on oligarchs is, sadly, a paper tiger.

Thanks to @anders_aslund @AmbDanFried @FINCENTFI @brianoftoole @JoshRudes @b_judah @ACGeoEcon @RUSI_org #PandoraPapers