New Report - “Bankrupting Kleptocracy: Financial Tools to Counter
Atrocities in Africa’s Deadliest War Zones”
Posted by Enough Team on Oct 10, 2016
Note: This blog contains excerpts directly from the report.
Today, the Enough Project released a new report, “Bankrupting
Kleptocracy: Financial Tools to Counter Atrocities in Africa’s
Deadliest War Zones,” by J.R. Mailey and Jacinth Planer. The report
describes how the state in several conflict-affected countries in East
and Central Africa has been hijacked and transformed from an
institution that is supposed to provide social services and safeguard
the rule of law into a predatory criminal enterprise that does quite
the opposite. The international community has the power to chip away
at the environment of impunity that characterizes these violent
kleptocracies—and the United States is in a position to play a leading
Tune in at 2 p.m. EDT today to watch the livestream
In these hijacked states, criminal cells use state power to loot
public coffers and natural resource wealth with impunity—and to
sideline or silence those who get in their way. Oversight institutions
are co-opted, marginalized, removed altogether, or used as political
instruments to abuse opponents or independent voices. Leaders loot
natural resources and divert state funds, funneling public money
directly into the instruments of war and repression. Security forces
use lethal force to quell protests, and countless journalists and
activists are attacked, intimidated, and harassed. Violent,
kleptocratic regimes often deny any sort of peaceful path to political
turnover or meaningful power-sharing, thereby encouraging the rise of
armed opposition movements and cycles of increasingly deadly force,
marked especially in East and Central Africa by the commission of mass
As the report describes, the globalized economy allows kleptocrats and
their enablers to store, move, and launder ill-gotten gains. The U.S.
government can, with its partners, leverage the interconnectivity of
the global economy, the size and primacy of the U.S. financial system,
and the significance of the U.S. dollar in global trade to target
kleptocrats and their ill-gotten gains.
“For decades, the United States and other international donors
have poured billions of dollars into peace talks and endless
peacekeeping missions. Although these efforts can be valuable parts of
an effective peacebuilding strategy, they often fail to achieve the
desired result because they don't address a core root cause and driver
of war: the warped incentive structures of officials who hijack state
institutions, loot public funds and natural resources, and use extreme
violence to maintain their grip on power.” - John Prendergast, Enough
Project Founding Director
“Bankrupting Kleptocracy” highlights the potential of three types of
tools to build leverage in the fight against violent kleptocracy:
targeted sanctions, anti-money laundering provisions, and anti-bribery
laws, including the Foreign Corrupt Practices Act (FCPA). The U.S.
government has used these tools to counter terrorism, nuclear
proliferation, and organized crime. These same tools, the authors
argue, can be used to fight kleptocracy in East and Central Africa.
Targeted financial sanctions are a potent tool to counter
kleptocracy precisely because of their ability to impact the target
the wealth of senior officials within kleptocratic regimes. This
directly addresses the need to alter kleptocrats’ problematic
incentive structures, which in this region are often oriented in favor
of violent extraction of wealth and repression of dissent.
Sanctions can be used to alter incentives to violently extract
wealth and repress dissent by:
Targeting the wealth of senior officials
Targeting individuals who engage in public corruption,
undermine democracy, or stifle free speech and assembly
Targeting those who facilitate and enable kleptocracy
(lawyers, wealth managers)
Targeting secondary actors who do business with those who are
Targeting certain business sectors but not others
Limiting the negative impact on humanitarian and social
services by clarifying and expanding sanctions exemptions.
Anti-Money Laundering and Asset Forfeiture:
Numerous anti-money laundering (AML) statutes provide the U.S.
government with the power to trace, block and, in some cases, seize
the illicit proceeds of overseas corruption. Anyone who knowingly
facilitates the movement of the illicit funds into or through the
United States (including the U.S. financial system) is engaging in
money laundering and could be subject to criminal prosecution as a
The Treasury Department’s Financial Crimes Enforcement Network
(FinCEN) has significant authority to place enhanced due diligence
requirements on financial institutions, investigate financial crimes,
and even impose sanctions-like prohibitions on overseas entities
believed to be involved in money laundering. Moving forward, FinCEN
should use these powers to identify banks, institutions, and classes
of transactions that kleptocrats use to loot and launder state assets.
Foreign Corrupt Practices Laws:
A foundational element of the U.S. framework for countering
violent kleptocracy is the Foreign Corrupt Practices Act (FCPA). This
law imposes a compliance requirement that places certain
record-keeping and accounting requirements on U.S. firms doing
business overseas and criminalizes bribery of foreign officials in
order to gain a competitive advantage.
Tools like the FCPA should be more vigorously deployed in
countries marked by violent kleptocracy where its impact will be more
effective and meaningful in terms of saving lives.
Steps must also be taken to ensure that the U.S. government agencies
that are responsible for administering the tools of financial pressure
have access to sufficient staff, resources, and intelligence about
foreign officials engaging in corruption.
These financial pressure measures should be used to create leverage in
support of broader political and diplomatic strategies that are
developed in concert with international partners and organizations
like the United Nations (UN), European Union (EU), and African Union
(AU). The U.S. government must also continue to cultivate
international partnerships to investigate and prosecute the
perpetrators of corruption and use a variety of international forums
to push reform-minded governments around the world to enhance
anti-corruption controls and bolster their own capacity to deploy
tools of financial pressure.
Read the Full Report >
Take Action: Urge President Obama to Use Financial Tools to Support
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