Putin’s Playbook: The Kremlin’s Use of Oligarchs, Money, and Intelligence in 2016 and Beyond

Chairman Schiff, Ranking Member Nunes, and distinguished members of the Permanent Select Committee on Intelligence, I am honored to appear before you today to discuss Putin’s Playbook: The Kremlin’s Use of Oligarchs, Money and Intelligence in 2016 and Beyond. As an economic sanctions compliance and illicit finance professional, I will focus my testimony on the impact – and limits – of U.S. sanctions in countering Russia’s continued malign activity. I will also discuss a number of additional measures that could be undertaken by the administration and Congress to limit the ability of Moscow and its cronies to surreptitiously move their funds and assets around the world.

As this committee knows well, Russia poses a serious national security challenge to the United States. In the last few years alone, Russia has illegally occupied Crimea; destabilized Ukraine through the use of the Russian military and its proxies; attempted to subvert Western democracies, including by attacking the integrity of U.S. elections; launched cyberattacks against the United States and our allies; supported the murderous Assad regime in Syria; and used chemical weapons to conduct assassinations in Western Europe, harming numerous civilians. The United States and its allies and partners must respond forcefully and thoughtfully to this threat, including through the use of targeted economic measures.

I will focus my testimony today on three key points. First, our sanctions on Russia have had an impact. Through the use of coercive economic measures, we have put pressure on particular Russian targets (including Russian oligarchs) and caused economic pain to the Russian economy writ large.

Second, this impact has been limited. While resulting in some changes in Russian behavior, existing sanctions are unlikely to significantly alter Russian decision making absent an escalation that would be costly to both our allies and partners in Europe and many in the private sector. Third, we need to look beyond sanctions to additional economic measures. Such measures should include tracking, tracing, and preventing illicit Russian funds from entering the legitimate international financial system to counter certain types of malign Russian influence and activity, as well as to pressure corrupt actors within Russia. This requires strengthening the anti-money laundering/combating the financing of terrorism (AML/CFT) backbone of the international financial system to limit Russian illicit finance. But members of Congress and the administration should be cautious in relying too heavily on these economic tools. In recent years, sanctions and related tools have become the tool of first resort in addressing a range of Russian malign activity. While they are powerful, they must be properly situated in a strategic framework and used to complement other elements of national power.