Stopping the Kleptocrats: A Strategy for the United States and Europe to Address Weaponized Corruption

Authoritarian kleptocrats are thriving on the West’s failures. Can they be stopped? This report proposes that the transatlantic community begin to address this threat by understanding that there have been two kleptocratic waves in recent history: The first wave began during the Cold War, and the second wave was closely linked to the era of globalization. When considering methods to counter kleptocracy, most transatlantic policy makers have in mind the first wave of kleptocracy, which primarily flourished in the late twentieth century. In fact, it is the second wave of kleptocracy, which emerged since the 2000s, that is more sophisticated, authoritarian, and integrated into the global financial system than its predecessor. Chapter 1 of this report notes an important distinction between these two waves: The second wave features weaponized corruption as a new challenge to the transatlantic community. Chapter 2 identifies, through a few case studies, the tools that second-wave kleptocrats use to spread and weaponize corruption. Chapter 3 highlights how second-wave kleptocracy has increasingly come to use financial crime in the global private investment, real estate, cryptocurrency exchange, and arts trade industries to achieve its ends. Chapter 4 discusses the need for a new platform to ensure that the transatlantic community harmonizes its regulatory environment, especially in the private investment industry.