A new report from the Global Initiative Against Transnational Organised Crime says the Western Balkans is now a key gateway for Russian money to flow illicitly across borders.
The report warns that weak rule of law, organised crime and a large “grey economy” throughout the Western Balkans, paired with the war in Ukraine, have allowed Russian Illicit Financial Flows (IFFs) to move through the region and interfere with critical decision making processes.
“The Balkans’ strategic geographic position, acting as a gateway between Asia and Western Europe, coupled with an ecosystem of state capture, institutional weaknesses, organised crime and a rampant shadow economy, make the region particularly susceptible to IFFs,” the author of the report, Vanya Petrova, told media.
“This fact has actively been exploited by major players such as Russia, China and the UAE to influence decision-making in key markets and institutions,” she continued.
Global IFFs are estimated to be worth between 1 to 1.6 trillion US dollars each year, accounting for 3 to 5 percent of global gross domestic product (GDP). Last year, however, that figure amounted to around six percent of the region’s GDP.
The introduction of global sanctions following Russia’s invasion of Ukraine has included a freeze of around 315 billion US dollars’ worth of Russian reserves held in the country’s Central Bank.
Russian elites are reportedly working to avoid sanctions through ““laundering money through the purchase of real estate and business assets; utilizing professionals to open bank accounts, initiate bank transactions, transfer funds and create corporate structures that directly or indirectly support them; using complex ownership structures to avoid identification; and using third-party jurisdictions and false trade information to facilitate sensitive goods shipments to Russia.”
Furthermore, Russians are avoiding sanctions via the Western Balkans through a combination of “state and media capture, simmering ethnic divisions, slow pace of EU accession and the legacy of Russian cognitive bias.”
Soon after the invasion of Ukraine in 2022, Ukrainian refugees have also brought undeclared cash with them into Europe. The wife of a former Ukrainian MP was caught at a border crossing for refugees with some US$28 million and €1.3 million in cash as she attempted to enter Hungary.
The report calls on Europe to further decouple its economy from Russian money, and to “prioritise the integration of the Balkans into the rollout of the newly designed Anti-Money Laundering Authority (AMLA) and coordinating their actions with US FinCEN and the financial intelligence institutions in each EU member state.”
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