Fertile land for crime – and reform
Transnational issues require international cooperation, and the G7 is well poised to work hand in hand with the Global South to fight economic crime, sanctions evasion and corruption
G7 leaders must continue to prioritise economic crime (including human trafficking and smuggling), sanctions evasion and corruption to preserve the rules-based international order. G7 leaders meet at Apulia amidst warfare, changes in political leadership, a rising number of fragile states and economic uncertainty – a setting ripe for exploitation by organised crime networks, corrupt actors and their enablers. Corruption costs $3.6 trillion per year. As much as 5% of global gross domestic product is subject to money laundering annually (between $2.2 trillion to $5.5 trillion in 2024). Given these transnational issues, G7 members must work together with the Global South to set the global agenda, provide leadership, and promote cooperation and collaboration including with the private sector, academia and civil society to fight economic crime, sanctions evasion and corruption.
Sanctions and sanctions evasion
More than 33% of the commitments made by G7 leaders at their Kyiv Summit on 24 February, following the death of Alexei Navalny, directly or indirectly referred to sanctions. Although G7 members have issued the most comprehensive sanctions against actors and industries in Russia, Belarus and third countries used to prop up Russia’s war economy and evade sanctions, pressure remains to provide additional financing to support Ukraine and cripple Russia’s war machine. Leaders may agree at Apulia on how to monetise the $300 billion in assets frozen under sanctions, but this must be done according to the G7’s founding principles of democracy and the rule of law. One innovative approach recently introduced by the G7 is to use blockchain traceability measures to implement a diamond ban. This will require G7 members to support developing blockchain monitoring to identify sanctions breaches throughout the supply chain. G7 members also need to continue coordinating sanctions to curb the proliferation of nuclear weapons given rising military rhetoric and cooperation between Russia, Iran and North Korea, recent Chinese cyberattacks against government democratic institutions in G7 members, and governments responsible for human rights abuses and atrocities in fragile and conflict states. The G7 should use soft diplomacy to build trust with the Global South. It should tackle sanctions evasion by intensifying capacity building efforts in third countries, particularly Russian proxy states in Africa and Eurasia, and industries affected by sanctions, such as oil, metals and diamonds. The G7 should also consider extending the extraterritoriality of sanctions beyond the US dollar and US ‘persons’ to national currencies and ‘persons’ of other G7 countries and the European Union.
Economic crime and corruption
Italy’s G7 presidency is prioritising human trafficking and human smuggling, a $150 million business. Corruption drives conflict, which leads to more displaced and stateless people – 130.8 million in 2024 – generating a pool of humans ripe for exploitation by criminals. G7 leaders must adopt the ‘Rome Process’ as a multi-annual platform for collective action on human smuggling and hold steadfast to the pledge made at the 2023 Hiroshima Summit “to break the business model of organised criminal networks”. This should include working closely with the private sector, including the transport industry and banking, to share financial intelligence to bolster prevention and detection efforts.
The G7 should also revisit tackling predicate crimes for money laundering and reaffirm the need to minimise criminals’ profits by strengthening anti-money laundering measures set by the Financial Action Task Force. This includes addressing the proceeds of drug trafficking, possibly via the Global Coalition to Address Synthetic Drug Threats, as fentanyl and amphetamines, synthetic drugs and precursor drugs remain huge income sources. This also includes environmental crimes, which contribute to climate change and generate up to $213 billion in profits annually through wildlife trafficking, illegal logging, waste dumping, and illegal, unreported and unregulated fishing. Special attention should be paid to promoting the United Nations Office on Drugs and Crime’s work on illegal mining and trafficking in metals and minerals: trafficking critical minerals, particularly in sub-Saharan Africa, affects supply chains, drives armed violence and harms local ecosystems. The G7 could explore extending the definition of environmental crime to include space debris, with an estimated 130 million pieces orbiting the Earth.
Predicate offences for money laundering include arms smuggling, the demand for which will likely rise for small arms and ammunition and also larger scale weapons as additional transnational conflict hotspots emerge. G7 leaders should call for closer exploration of illicit financial flows with fragile and conflict states alongside arms smuggling routes. They should task the FATF to explore applying anti-money laundering measures to atrocity financing and the financing of private military companies committing human rights abuses, with consideration given to making war crimes a predicate offence for money laundering.
Finally, they should call for closer study of the links between technology, corruption and money laundering. This includes exploring technology as a driver of money laundering both as a threat with the continuing rise of artificial intelligence and low-cost crime-as-a-service, computer-generated fraud, state-supported ransomware attacks, and exploitation of new technologies such as blockchain as the price of crypto assets skyrocket. There is an opportunity to identify illicit financial flows, deepen investigations and support asset seizure activities and to develop digital solutions that promote transparency, public access to data, trust in public institutions and citizens’ ability to hold governments to account to fight corruption.
