Transnational crime: The case of Russian organized crime and the role of international cooperation in law enforcement

Demokratizatsiya, Winter 2002 by Shelley, Louise

The Americans more than the Russians have heralded the results of the cooperation, a situation explained by the retention of large amounts of Russian capital within the United States and the failure to repatriate many of Russia's stolen assets. The implication of many Russian officials in the criminal investigations has created extraordinary sensitivity in Russia and highlighted the centrality of the crime issue to the legitimacy of state governance.

Globalization of Crime and the Russian-American Relationship

The globalization of crime, flowing particularly from the former Soviet Union, has important implications for the development of the Russian state and the image of Russia in the international community. 11 Many in Russia believe that its image as a superpower and a source of great intellectual activity has been overtaken by the perception of Russia as the source of the international scourge known as "the Russian mafia." The politicization of the crime issue has made many Russians believe that the Russian mafia threat has replaced the communist threat in the eyes of many former cold warriors. Many influential Russians also believe that the West has exploited the crime issue for political gain, yet at the same time Western institutions benefit enormously from the billions in Russian assets laundered and stored in the West. 12

The distribution of Russia's assets in financial banking centers and offshore havens throughout the world have brought a truly international dimension to investigation of Russian money laundering. 13 In the Bank of New York case, the assets in the investigated accounts had moved or would move through approximately forty different countries. 14

Ironically, Russia's criminals and ex-nomenklatura members have been most successful in capitalizing on the globalization of the world's financial markets. 15 Through their perfection of the vehicles of front companies, trust agreements, and other mechanisms used to hide wealth, they have been the major beneficiaries of the expansion of safe havens in the globalized economy. Many of those involved in these complex financial operations are former KGB personnel who moved funds abroad during the Soviet era. The proficiency of the international lawyers they have hired to craft the trust agreements for the obscure locales where they park their money have made tracing their sheltered assets extremely difficult. 16

Russians are also at the forefront of using technology to exploit the globalized offshore economy. The European Union Bank, an offshore bank in Antigua operated totally through the Internet, was established by a Russian. The bank was closed before the Antiguan regulators were ever able to inspect its records. The depositors remained anonymous because the files were encrypted with such sophistication that they could not be opened by American law enforcement. Moreover, none of the depositors has come forth to file a complaint because the sources of their funds or their intentions were probably not legitimate. 17