A US Counter-Kleptocracy Strategy Leveraging Corruption Against America’s Adversaries

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Introduction

When Western governments imposed sweeping sanctions on Russian elites after the full-scale invasion of Ukraine in February 2022, many observers hoped the pressure would fracture the Kremlin’s inner circle, forcing Vladimir Putin to reconsider the war or perhaps even destabilizing the regime itself. This optimism reflected a broader conviction, then increasingly influential in Washington, that targeting kleptocratic networks was an untapped tactic for constraining corrupt authoritarian adversaries—and perhaps even hastening their transition to pro-Western democracies.

That idea had already gained significant institutional traction in the United States. In June 2021, President Joe Biden declared that countering corruption was a core US national security interest, and six months later the White House published the first full US Strategy on Countering Corruption.^[1] Congress passed landmark financial transparency legislation and formed a bipartisan Caucus Against Foreign Corruption and Kleptocracy to coordinate further efforts.^[2]

Global events soon overshadowed this momentum, however. Instead of turning on Putin, Russia’s so-called oligarchs meekly assembled at the Kremlin to be lectured by him on the merits of what he called a special military operation.^[3] Their acquiescence reflected the extent to which Putin had succeeded in curtailing the influence of business elites, consolidating power instead around himself and the security services loyal to him.

The West’s oligarch sanctions prevented Russian elites from enjoying their wealth in the West while Ukraine burned, and they froze enormous sums that the Kremlin could not draw on to support its aggression. But these measures did not generate the internal political pressure many had expected, let alone precipitate a palace coup. The episode demonstrated that targeting kleptocracy has real benefits for the United States and its allies—but it is not necessarily a silver bullet for restraining authoritarian regimes motivated by factors beyond self-enrichment.

At the same time, an even more consequential strategic shift further sidelined the anti-corruption agenda: the return of great-power competition as Communist China adopted a more aggressive approach to exerting global influence. Beijing’s emergence as a global power has given authoritarian and hybrid regimes an alternative partner to the United States and its allies, one willing to provide capital, infrastructure, technology, and diplomatic cover without attaching meaningful conditions related to democratic governance or the rule of law.

This has resurfaced an old tension in US foreign policy. How should the United States compete in a world where major adversaries routinely use corrupt practices and elite capture as instruments of statecraft? For a long time and under successive US administrations, the answer was to promote US values that were assumed to be universal aspirations, such as democracy, human rights, and the rule of law.

President Donald Trump’s return to office marked a sharp change of tone. In one of his first foreign policy speeches, he promised Middle Eastern leaders no more “lectures on how to live,” making explicit his preference for a more transactional foreign policy centered on using hard power in pursuit of strategic and commercial interests.^[4]

The rhetorical shift was quickly reflected in policy and institutional reform. The administration moved with dizzying speed to shrink or shutter institutions associated with democracy promotion and soft power, including the US Agency for International Development, the US Agency for Global Media, and even the congressionally mandated National Endowment for Democracy.^[5] It reassigned kleptocracy specialists at the Department of Justice and announced drastic reductions in enforcement of flagship anti-corruption laws, such as the Foreign Corrupt Practices Act (FCPA) and Foreign Agents Registration Act.

Some criticisms of these institutions were not without merit, including their propensity for mission creep and, often, the counterproductive promotion of progressive values in societies that found them abrasive. But if US policymakers conclude that combating kleptocracy is merely about promoting abstract or contested values and therefore secondary to “real” statecraft, they will cede ground to dangerous adversaries that use corrupt practices to project malign influence far beyond their own borders.

The problem is not simply that these regimes steal from their own people. It is that their corruption shapes how they govern, project power, and compete with the United States. In addition to becoming less democratic, a world increasingly reshaped around China’s model of state-directed crony capitalism would be far less favorable to America’s economic and security interests.

In this era of great power competition, US anti-corruption leadership needs a more focused approach than it did previously. An effective US counter-kleptocracy strategy, while acknowledging the limits of American soft power, should seek to exploit the fact that America’s principal adversaries are all kleptocracies with critical governance vulnerabilities.

1. Background—Corruption or Kleptocracy?

All societies experience corruption to a greater or lesser degree, but not all societies are kleptocracies. While there is no need for an extended discussion of the many definitions of these terms as they are used and abused across the political, legal, and academic realms, the basic distinction is an important one for the purposes of this paper. Transparency International’s widely accepted definition of corruption is “the abuse of entrusted power for private gain.”^[6] This includes a broad range of misconduct, such as bribery, embezzlement, and nepotism.

Most definitions of kleptocracy, which literally means “rule by thieves,” involve some slight variation on that offered by Merriam-Webster: “government by those who seek chiefly status and personal gain at the expense of the governed.”^[7] Many people use the term casually to reference specific acts of egregious corruption, but this is not quite correct because kleptocracy is a governance system.

This matters for the purposes of this paper because it is not concerned with a general global anti-corruption agenda. Its focus is a counter-kleptocracy strategy that exploits vulnerabilities presented by the systemically corrupt governance systems of America’s principal adversaries.

The Darker Side of Globalization

Analysts have discussed the rise of transnational kleptocracy extensively, but it is worth briefly revisiting the principal developments that enabled its emergence as a pervasive global threat.

For most of human history, what we might today call authoritarian kleptocracy was the default form of government, though a society’s borders usually contained it somewhat. However rapacious local elites might be, societies often tied wealth to physical assets such as land, coinage, commodities, and local patronage networks. Large-scale capital flight was possible but difficult. Moving stolen wealth abroad would have required trusted intermediaries, conspicuous transport, and assurances from foreign jurisdictions willing to protect it. But in the second half of the twentieth century, these constraints quickly evaporated as the global economy became increasingly sophisticated and interconnected.

Electronic banking and other new financial technologies made moving value across the world at the click of a button possible. This allowed offshore financial centers to multiply and specialize. Small jurisdictions built lucrative business models around low taxes, secrecy, light regulation, and legal structures designed to obscure beneficial ownership. The developers of these systems marketed them to wealthy Western clients as tools of privacy and tax avoidance. But the same features made them ideal vehicles for kleptocrats, sanctions evaders, and money launderers. Money no longer had to travel conspicuously as cash or bullion; its holder could bounce it anonymously across borders through shell companies and offshore banks without anyone noticing.

The post-Communist opening and wider liberalization of developing economies infused this offshore system with vast new pools of dubiously sourced wealth. Elites in Russia, the former Soviet bloc, and other rapidly opening economies gained access to global financial markets before meaningful rule-of-law institutions had taken root at home. Regimes distributed public assets to their cronies under the guise of privatization and increasingly seized private assets for the same purpose. Western lawyers, accountants, bankers, and corporate service providers often facilitated this process, whether out of ignorance or a cultivated unwillingness to ask where the money came from.

Western governments and institutions greedily welcomed the glut of foreign investors as businessmen, philanthropists, and patrons of culture and education. This was not always outright complicity but a mixture of wishful thinking, commercial opportunism, and bureaucratic inertia. The effect was the same: dirty money flooded into financial centers, legal systems, and elite institutions before its corrosive effects were fully understood.

Meanwhile, anti-money laundering initiatives were slow to emerge and adapt. Governments had long treated financial crime as mainly a domestic issue. Cross-border cooperation in complex financial investigations was (and remains) legally cumbersome, underresourced, and easily obstructed by political concerns. Even where laws existed, enforcement efforts struggled to match the pace and complexity of financial globalization. As a result, corrupt elites could now steal at home, move assets abroad, and insulate themselves from accountability with far greater ease and fewer risks than ever before.

China’s rise has arguably unlocked a second wave of globalized kleptocracy. Just as capital flight from Russia and former European colonies helped drive the expansion of offshore finance in the late twentieth century, Chinese private wealth and state-backed finance are reshaping those networks in the twenty-first. Wealthy Chinese trying to circumvent their country’s capital controls are altering the offshore landscape, while Chinese state-owned companies and opaque lending practices are supercharging corruption risks across the developing world.

The consequences of the rise of transnational kleptocracy extend far beyond the persistence of poverty in a global economy that should generate ample resources for every population’s basic needs. Corruption always hampers economic development, but when it hardens into kleptocracy, it also becomes a force multiplier for more direct threats to prosperity and security—including many of the most serious challenges now facing the United States and its allies.

A Fundamental Threat

Kleptocracy’s most obvious, yet least discussed, threat to US prosperity and security is its opportunity costs. American companies cannot compete effectively in markets where bribes are necessary to secure contracts and operate safely. Not only do US laws like the FCPA govern their conduct, but Chinese state-owned companies are also far more adept at operating this way.

Terrorist and organized crime groups thrive in societies where the population has lost faith in state institutions, feeding on popular resentment and the lack of economic opportunities that kleptocracy creates. Organized crime groups meet the needs of local populations through black markets for goods and services, but they also exploit weak state oversight to meet international demand for illicit products. The most obvious example is Mexican cartels and the US illegal drug trade.

Terrorist groups, meanwhile, find willing adherents for twisted ideologies and dangerous activities among those whom predatory, corrupt elites have rendered destitute and desperate. In extreme circumstances, competition for increasingly scarce resources leads to insurgency and civil war as rival factions vie for control of state institutions that distribute revenues and other benefits to political or ethnic patronage networks.

In recent years, major US foreign adversaries that are themselves kleptocracies and have become adept at using corrupt practices as tools of foreign policy have severely exacerbated these problems. Such practices are not necessarily intentional but are natural extensions of their own kleptocratic systems. China’s Belt and Road Initiative (BRI), Russia’s mercenary activities in Africa, and Iran’s network of proxies across the Middle East are all very different examples of how powerful kleptocracies co-opt local elites in other countries. They exacerbate existing corruption risks and create new ones in some of the most vulnerable societies.

Each of these regimes possesses a kleptocratic governance system that is very different in nature and scale but has empowered it politically by consolidating domestic control of corrupt patronage networks. This authoritarian entrenchment reduces the possibility of transition to a government that is more amenable to the United States and its allies.

The media often caricatures kleptocrats as brash Russian oligarchs or eccentric African despots; these perceptions are common but usually outdated and unhelpful. Xi Jinping, for example, oversees the world’s largest kleptocracy, but few perceive him as corrupt himself. He has learned to publicly confront corruption to shore up the party’s (and his own) legitimacy while selectively punishing alleged graft to consolidate power. Vladimir Putin, by contrast, is deeply corrupt. But even he was prepared to give up the chance of retiring to enjoy his stolen private wealth to enact his revanchist obsessions over Ukraine. Power, ideology, and other non-financial incentives are just as important as venality in shaping modern kleptocracies.

Consolidated authoritarian regimes are considerably more willing and able to engage in external aggression than those facing meaningful domestic constraints. Russia’s invasions of Ukraine, Iran’s relentless proxy campaigns across the Middle East, and China’s increasingly assertive posture in the Indo-Pacific all reflect, in different ways, the external ambitions of regimes whose domestic grip kleptocracy has helped to secure.

China and Russia in particular are deploying bribery and other corrupt practices alongside broader economic coercion tactics to co-opt or at least weaken America’s democratic allies in Europe and elsewhere. They use the same tactics to subvert multilateral institutions that set international standards and norms in global politics and technology.

The strongest threat posed by kleptocracy is therefore not that a few million dollars go missing from a pothole fund in a faraway country. It is that highly competent, dangerous, and powerful adversaries of the United States learn to manipulate patronage networks and consolidate power sufficiently to project crime and corruption beyond their own borders and undermine US interests. In this sense, kleptocracy underpins almost every threat facing America and its allies today.

It follows that the first priority of a US counter-kleptocracy strategy should be to strike at the corrupt governance systems that sustain America’s most dangerous foreign adversaries.

2. Leveraging Corruption Against US Adversaries

Foreign adversaries are regimes that the secretary of state has formally determined to have “engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States.” This currently includes China, Cuba, Iran, North Korea, Russia, and the regime of Nicolás Maduro in Venezuela.^[8]

The leaders of two of those adversaries recently met dramatically different fates. US Special Forces extracted Nicolás Maduro from Venezuela in a daring raid and delivered him to face American justice, while joint US-Israeli strikes killed Iran’s Supreme Leader Ali Khamenei. Major changes in Cuba also appear increasingly likely.

So far, the Trump administration seems to be experimenting with regime management instead of pushing for regime change in Venezuela and, possibly, Iran and Cuba. Given the challenges and failures previous US administrations have encountered in Iraq, Afghanistan, and elsewhere, this cautious approach is understandable.

But because these regimes are transnational kleptocracies, they do not survive on the iron will of a single strongman as in previous eras. The reach and durability of their illicit financial networks means the patronage structure is deeply entrenched. It is no longer enough to remove a dictator—it is necessary to defund the dictatorship.

The regimes in Cuba and Venezuela find themselves in existential crises because of pressure from the United States. But the same does not appear to be true of Iran, Russia, or North Korea, and certainly not of China. Though they undoubtedly face internal challenges, the kleptocracies that sustain their authoritarian rule are not in immediate danger of collapse.

This section examines the structure of kleptocracy in each of these outwardly very different regimes, how it shapes their conduct on the global stage, and how the United States can turn the threat that their corruption poses into a vulnerability and use it against them.

China

Few Western observers instinctively think of China as a kleptocracy. Unlike many countries associated with pervasive corruption, it appears orderly, highly capable, and materially successful. It has built world-class infrastructure, emerged as a leading industrial power, and presented itself, especially to the developing world, as evidence that authoritarian governance can deliver prosperity at scale.

Yet that appearance obscures a more complicated political reality. A 2025 assessment by the Office of the Director of National Intelligence found that corruption remains “an endemic feature of and challenge for China.”^[9]

Corruption in China is not a residual defect from an earlier, poorer era. It is deeply embedded in the structure of one-party rule that the Chinese Communist Party (CCP) established in 1949. In such a system, career advancement, commercial success, and access to state resources necessarily depend on political relationships.

But the incentives to engage in corrupt practices exploded during the economic liberalization initiatives of the 1980s and 1990s. That these apparently failed to impede, much less derail, China’s subsequent economic “miracle” has often puzzled external observers.

In her book China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption, political scientist Yuen Yuen Ang explains how meteoric growth occurred not in spite of the unique form of kleptocracy that China’s system produced but because of it.^[10] Unlike embezzlement or the kind of petty bribery that impedes bureaucratic processes elsewhere, what Ang calls “access money” created a perverse but growth-boosting incentive structure endemic to China’s one-party model.

Beijing pressured local officials to compete against one another in delivering favorable economic growth statistics at any cost. To succeed, they developed long-term partnerships with local entrepreneurs who were only too willing to offer hospitality and kickbacks in exchange for permits, licenses, and off-the-books lending for their massive infrastructure and real estate projects. This superficially aligned local officials’ venality with both official development targets and the ambitions of emerging private sector leaders.

The result was explosive gross domestic product growth that many non-Chinese observers mistook for evidence of extraordinarily good governance and an alternative development model to the one the West championed. The CCP was obviously keen to encourage this impression.

However, understanding how access money powered China’s rise also reveals its limits as an economic powerhouse. Success has concentrated benefits among politically connected elites while the masses founder in the middle income trap. Beijing has stoked overcapacity and diverted capital toward infrastructure, real estate, and other prestige projects that enrich officials rather than generate genuine productivity. And it has produced an opaque financial system overloaded with hidden debt and other liabilities.^[11]

The nature of China’s mounting economic problems serves to vindicate Ang’s analysis. As she is keen to stress, China’s sustained growth has not necessarily delivered sustainable development. The situation is analogous to abusing steroids rather than adopting a healthy diet: the gains have been fast, visible, and intimidating, but the underlying system is distorted, damaged, and perhaps doomed.

Xi’s Anti-Corruption Campaign

Xi Jinping came to power just as the problem of corruption was becoming too large for the party to ignore. Bloomberg’s well-known 2012 investigation found that members of Xi’s own extended family had accumulated substantial business interests even as Xi prepared to assume power.^[12] The New York Times reported similarly on the wealth that the family of then-Premier Wen Jiabao had amassed.^[13]

Xi’s response was the most sweeping anti-corruption campaign in the history of a system well-known for its periodic purges. While precise statistics are difficult to verify, the CCP is widely understood to have investigated and punished millions of officials across all levels of government. Western observers often regard the campaign as nothing more than a crude purge, but it also represents a genuine attempt by Xi to strengthen the party’s ability to govern and thus preserve its legitimacy in the eyes of the public. The West should not mistake it for a genuine attempt to strengthen the rule of law, however. In Communist China, “corruption” can encompass not only financial misconduct but managerial incompetence, ideological deviation from the party, or simply perceived disloyalty to Xi.

The bodies responsible for investigating misconduct, the Central Commission for Discipline Inspection and its regional commissions, are political organizations that report directly to their party committees. There is no independent oversight or accountability outside the CCP structure. The result is an enforcement system that is inherently arbitrary, readily politicized, and the perfect vehicle for consolidating power under the guise of improving governance. Xi has used it to remove potential rivals and replace their power base with his own loyalists at every level of the party structure.

The campaign initially proved popular among ordinary Chinese frustrated by rising wealth inequality. But as time goes on, it is increasingly apparent to many that the problem is not a few bad apples but the tree itself.

Military Corruption

Xi’s anti-corruption campaign reveals not only the party’s determination to preserve itself but also its anxieties. Nowhere is that clearer than in his repeated attempts to purge the People’s Liberation Army. The PLA is modernizing rapidly and poses a serious challenge to the United States and its allies, but it is also shaped by the same incentives that drive corruption throughout the Chinese system.

The result has been recurring scandals in exactly the parts of the military that matter most to US strategy. In 2023, the PLA Rocket Force was found to have been filling missiles with water instead of fuel,^[14] among other transgressions. This revelation sparked a major investigation that resulted in the disappearance of former defense minister Li Shangfu and many other senior officers.^[15]

The purge has since widened. In late 2024, the party suspended Admiral Miao Hua, the political work chief on the Central Military Commission, and placed him under investigation.^[16] In June 2025, the media reported that the CCP had expelled both Miao and Li. The US-China Economic and Security Review Commission recently concluded that the campaign had widened across the PLA, reached new branches of the force, and was likely to hinder weapons modernization, create command instability, and erode morale in the short term.^[17]

Corruption in military procurement is not an abstract governance problem. It affects readiness, logistics, maintenance, quality control, and trust within command structures. A force can appear formidable on paper and at parades but collapse quickly when war tests its integrity. The significance to US policy lies not in assuming the PLA is weak but in recognizing that corruption remains a persistent drag on the military instrument that Xi may one day seek to use against Taiwan.

Kleptocracy as Foreign Policy

China’s kleptocracy is not confined within its own borders. It has become one of the principal ways Beijing builds influence abroad. The most important vehicle is the Belt and Road Initiative, which has extended Chinese lending, contracting, and infrastructure influence across much of the developing world.

AidData, a research center at the College of William and Mary, has provided some of the clearest insights into how the BRI operates.^[18] A 2021 global dataset documented 13,427 Chinese development projects worth $843 billion across 165 countries between 2000 and 2017. Roughly 35 percent had encountered major implementation problems, including corruption scandals, labor violations, environmental hazards, and public protests. AidData also identified approximately $385 billion in Chinese overseas lending that countries hold as off-the-books “hidden debt” and have routed through state-owned enterprises, special-purpose vehicles, and off-balance-sheet structures.

These findings show that China’s influence is not only about scale but about the terms on which it operates. Opaque deals, tied procurement, state-backed contractors, and elite-level political negotiation create ideal conditions for corruption and dependency. Many recipient states have defended Chinese projects not because they are economically sound propositions but because they are politically useful and privately profitable to the actors making the decisions. In that sense, Beijing’s external model mirrors key features of its domestic one: it allows political access and economic advantage to reinforce one another and treats transparency as an obstacle rather than as a safeguard.

China has also used financial relationships, elite cultivation, and commercial access more quietly inside advanced democracies, through business ties, institutional funding, and the cultivation of individuals who can shape debate, policy, and technology access. The mechanisms vary, but the approach is consistent: money, access, and selective privilege are tools to deter scrutiny and build constituencies inclined toward accommodation.

Implications for US Policy

China presents a different counter-kleptocracy challenge from the other adversaries examined in this paper. It is not a collapsing petrostate or an isolated rogue regime. It is a sophisticated party-state that has spent more than a decade trying to manage corruption’s destabilizing effects while preserving the political and economic advantages of discretionary rule.

No plausible US sanctions campaign is going to threaten the immediate survival of the CCP. The question is not whether counter-kleptocracy can bring the regime down but whether it can expose, constrain, and exploit the vulnerabilities that the regime’s own governing model creates.

China’s system remains dependent on opacity and political access, both domestically and internationally. The PLA’s recurring anti-corruption purges show that corruption remains a live problem in sectors central to deterrence. And the CCP’s legitimacy narrative remains vulnerable to evidence that the party is neither as clean nor as competent as it claims.

The purpose of a counter-kleptocracy strategy toward China, then, is not regime change. It is to exploit the corruption embedded in the PRC’s military, economic, and influence apparatus in ways that complicate Beijing’s ability to project power and turn opacity into leverage.

Cuba

Cuba’s kleptocracy predates the Castros, but under the current regime, it has become all-consuming.^[19] Fidel Castro came to power denouncing Fulgencio Batista’s corruption and promising national renewal. What he built instead was a one-party state in which the nationalization of economic life gave the regime near-total discretion over the allocation of resources, opportunity, and privilege. Access to housing, consumer goods, travel, foreign exchange, and employment became politically mediated, while the intelligence and security services protected the regime’s monopoly over those channels. Scarcity in Cuba is not merely a failure of governance but one of the regime’s principal instruments of control.

That structure is now concentrated most visibly in Grupo de Administración Empresarial S.A. (GAESA), the military-controlled conglomerate that dominates large parts of the Cuban economy. Operating in tourism, retail, logistics, finance, and remittance-related flows, it lacks meaningful public oversight or institutional checks.

The regime routinely blames US sanctions for Cuba’s impoverishment, but they have not stopped insiders from amassing considerable fortunes while ordinary Cubans forage for food, miss their medications, and endure frequent power blackouts. In early 2026, financial documents leaked to the Miami Herald revealed that the military had hoarded as much as $18 billion in secret bank accounts, including $4.3 billion in a GAESA subsidiary that dominates the island’s hotel industry.^[20]

Remittances also illustrate this model’s cynicism. They are indispensable to Cuban families, but for years one of the principal channels for processing those flows was Fincimex, a remittance company tied to GAESA.^[21] The regime was skimming money that Cuban Americans sent to support relatives who were struggling due to Havana’s corruption and mismanagement.

This gives the Cuban government a perverse incentive to preserve scarcity rather than solve it. A population kept poor, rationed, and dependent will rely more heavily on dollar remittances. The regime, whose model cannot deliver genuine economic opportunities, can control those inflows for self-enrichment and social control. That is one reason why Cuba’s current system is more than a case of economic mismanagement; it is a durable kleptocratic order that converts deprivation into leverage over its own people.

Cuba’s kleptocracy does not stop at the water’s edge. For decades, the regime has used foreign relationships to secure revenue, expand its intelligence reach, and protect its political system. The United States first added Cuba to the State Sponsors of Terrorism list in 1982, citing support for insurgent and militant movements in Latin America and elsewhere. The Cuba-Venezuela axis has been especially consequential. For two decades, subsidized Venezuelan oil, intelligence cooperation, and political alignment gave Havana economic relief and regional influence far beyond what its own economy could sustain.

The regime has also exploited weaknesses in US systems. In 2011, seven of the Department of Health and Human Services’ 10 most-wanted Medicare fraud fugitives had ties to Cuba, while the department said the inaugural list was associated with more than $124 million in alleged fraud.^[22]

That does not prove every such case was a Cuban intelligence operation. But it does show that Cuba has repeatedly functioned as a permissive jurisdiction and safe haven for high-value fugitives involved in large-scale fraud against US public programs.

Cuba’s kleptocracy seems unlikely to collapse on its own. The regime has learned not merely to endure scarcity but to manipulate it, converting deprivation into dependence and dependence into political control. But the United States’ recent move to cut off the Venezuelan lifeline that has helped sustain it for years has thrown the regime into a perhaps existential crisis. The challenge is to capitalize on the moment and secure a transition to democratic government—which may require more direct action by the United States in support of the Cuban people.

Iran

The theocratic regime that seized power in Iran in 1979 denounced monarchical excess and promised moral government. Instead, it expropriated thousands of private businesses and nationalized key sectors, creating the structural conditions for a system of patronage and impunity that has deepened ever since.

At the center of that system stands the Islamic Revolutionary Guard Corps (IRGC). Established to defend the revolution rather than the nation, and with a constitutional mandate that extends far beyond military activities, the IRGC has entrenched itself in construction, oil and gas, telecommunications, transportation, border management, and the opaque commercial networks that connect Iran to the outside world.

A Wall Street Journal investigation described the resulting order as a “military-bonyad complex.”^[23] In this system, the IRGC, affiliated religious foundations, and politically loyal institutions control more than half of the economy. They enjoy tax advantages and privileged access to state resources, and can distribute jobs, contracts, loans, educational opportunities, and consumer benefits in ways that bind supporters materially to the regime.

At the apex of this system sat Supreme Leader Ali Khamenei and the quasi-governmental empire that answered to his office rather than to any transparent legal authority. The most notorious node in that network was Setad, or the Execution of Imam Khomeini’s Order. In 2013, Reuters estimated that this organization controlled roughly $95 billion in real estate and corporate holdings built largely through property seizures and opaque acquisitions.^[24] The precise figure is now dated, but the point is that the supreme leader’s office has long enjoyed access to a vast, poorly scrutinized commercial structure that rivals or exceeds the fortunes associated with the late shah. The pattern apparently continues with the appointment of Khamenei’s son, Mujtada, who reportedly controls a global property empire worth hundreds of millions of dollars and has funneled billions of dollars into Western markets through a diverse business portfolio.^[25]

This structure helps to explain the regime’s extraordinary resilience. Rather than ideology, the Iranian regime is held together by a dense patronage system that rewards loyalty and punishes independence. Those willing to defend the Islamic Republic gain access to jobs, promotions, university places, consumer benefits, and protection. In other words, the regime survives not because it governs well but because it has built a durable rewards system for those tied to it materially as well as politically.

Unlike in Russia, however, the regime’s corruption has not become politically inert. Public anger over elite privilege, inflation, and economic decline has been a recurring feature of unrest, from labor and pension protests to broader nationwide demonstrations. The resentment is not difficult to understand. The aghazadeh, the children of elite officials and clerics, have become symbols of a system that preaches sacrifice while protecting privilege. Their displays of wealth on social media have repeatedly enraged an Iranian public whose own children suffer harassment and mutilation by the regime’s “morality” enforcers and have no economic opportunities.^[26] In a theocratic republic that claims moral legitimacy, visible elite impunity is especially corrosive.

Kleptocracy as Foreign Policy

Iran’s shadow financial empire does not merely enrich insiders. It sustains one of the most dangerous systems of proxy warfare and coercive influence in the world.^[27] Tehran’s regional strategy depends on moving money, goods, and technology through channels that are deliberately opaque: front companies, exchange houses, commodity traders, hawala-style transfers, shipping intermediaries, and professionally managed cover firms. These are not ad hoc sanctions workarounds but the financial architecture of the Islamic Republic’s foreign policy.

The United States has exposed part of that machinery in increasing detail. In June 2024, the US Department of the Treasury described a “shadow banking system” that Iran’s military used to launder billions of dollars in oil proceeds and other illicit revenue through exchange houses and front companies abroad.^[28] In June 2025, the Financial Crimes Enforcement Network (FinCEN) issued an advisory showing how United Arab Emirates– and Hong Kong–based front companies linked to sanctioned networks were helping Iran’s main oil and petrochemical exporters, as well as the Iranian military, evade sanctions and move funds.^[29] In October 2025, FinCEN identified roughly $9 billion in Iranian shadow-banking activity in 2024 alone, much of it routed through shell companies and oil firms linked to hubs such as the UAE, Hong Kong, and Singapore. These actions make clear that Iran’s resilience under sanctions depends not on autarky but on an offshore financial empire.

Oil remains the regime’s indispensable lifeline, and China remains its indispensable customer, purchasing roughly 90 percent of Iran’s exported oil through networks designed to disguise origin, ownership, and destination.^[30] Treasury has increasingly tried to target this relationship through designations against Chinese teapot refiners, shipping firms, and the shadow tanker fleet that keeps Iranian crude moving. Tehran has shown considerable resilience in adapting these routes, but that resilience depends on commercial partners abroad, not on domestic strength.

Iraq illustrates the wider regional implications. Tehran’s influence there is not just ideological or military but financial. For years, compromised Iraqi banks used a dollar transfer system they had set up with US support to move tens of billions of dollars abroad in ways American officials feared were benefiting Iran and its allied militias.^[31] Reuters later reported that a sophisticated fuel-oil smuggling network based in Iraq was generating at least $1 billion annually for Iran and its proxies.^[32] In July 2025, Treasury and Reuters separately described a network moving billions of dollars of Iranian oil disguised as, or blended with, Iraqi oil. These are not marginal scandals. They show how Iranian power feeds on the corruption of neighboring states, turning weak oversight into strategic depth.

Implications for US Policy

Iran’s financial networks are already under sustained pressure. However, Treasury officials often find themselves playing whack-a-mole as Tehran responds to designations by reconfiguring its exchange-house networks, front companies, shadow-fleet logistics, and permissive foreign banking relationships. The logical next stage is not simply to sanction more Iranian names but to impose sharper costs on the foreign actors that make the system work, above all in China, the UAE, and other key nodes. That means moving up the chain from teapot refiners and tankers to the banks, insurers, brokers, and traders that keep Iranian money moving.

It is also important to acknowledge a hard truth about maximum-pressure campaigns. Sanctions weaken Iran’s economy, but—as with Cuba—if the US does not pair them with aggressive network disruption, they run the risk of causing a scarcity that strengthens the regime by increasing the value of illicit access. The objective should be to hit significant actors repeatedly enough that the regime’s shadow empire becomes more costly to operate and less capable of financing repression and aggression.

Finally, corruption remains one of the Islamic Republic’s deepest legitimacy vulnerabilities. Public anger at elite privilege, economic mismanagement, and visible impunity has fueled every major protest wave of recent years. The United States clearly has an interest in supporting independent journalists and civil society groups who work to expose this corruption.

North Korea

North Korea’s kleptocracy is often obscured by the system’s secrecy and overshadowed by its nuclear saber-rattling, but the Kim regime remains one of the purest expressions of kleptocratic rule in the world.^[33] The regime has not organized the state around national development or even around the ordinary functioning of a command economy. Its focus is regime survival and the generation of hard currency for the ruling family and the security apparatus that protects it.

Political loyalty shapes access to food, housing, education, and employment, making dependence on the state a governing principle. But the North Korean system is more than a simple hierarchy of privilege. It is also a society in which scarcity has become so chronic that corruption and informal payments are woven into daily life. The state monopolizes opportunity at the top while ordinary people, local officials, and security agents improvise and barter below.

The result is a horrendously distorted political economy in which elite predation and survival-level corruption coexist, reinforcing each other. The human consequences are central to understanding how this kleptocracy works. North Korea’s recurring food crises are not simply the result of poor harvests or economic isolation. Even at moments of acute humanitarian distress, the leadership has preserved spending on the military, internal security, and elite privileges. Imported luxury goods, expensive vehicles, watches, liquor, and other prestige goods are not incidental extravagances. They are part of the governing model, tools to reward loyalty and emphasize the distance between the rulers and the ruled.

One of the clearest windows into this system is the regime’s continued demand for luxury goods despite decades of sanctions and widespread poverty. Imported prestige goods are tools of elite management as much as personal indulgence. For all its rhetoric of self-reliance, North Korea remains dependent on foreign trade, shipping, and financial facilitators to acquire them.^[34] The same overseas procurement networks that move luxury goods can also move more strategically important contraband, which is one reason enforcement against seemingly frivolous imports can yield useful intelligence about the regime’s wider commercial architecture.

North Korea’s kleptocracy has also adapted to the digital age. Pyongyang has become one of the world’s most pioneering and aggressive state-backed cybercriminal actors.^[35] It uses cryptocurrency theft, shell companies, over-the-counter brokers, and foreign banking channels to generate revenue for weapons programs, sanctions evasion, and elite survival. This is not freelance criminality but an institutionalized funding stream for the regime. The same is true of the broader illicit economy that has long sustained North Korea abroad: arms trafficking, smuggling, labor exploitation, procurement fraud, and financial deception are integral to how the state survives under pressure.

North Korea’s external relationships increasingly reflect the same logic. Its deepening partnership with Russia has provided hard currency, diplomatic cover, and likely access to technology in exchange for ammunition, missiles, and even troops. However, China remains the indispensable partner through which much of North Korea’s illicit commerce flows, whether directly through trade or indirectly through the financial and logistical channels that make sanctions evasion possible.^[36]

For the United States, the implication is clear. North Korea is too entrenched and too heavily sanctioned for more symbolic pressure on Pyongyang itself to produce dramatic change. The more vulnerable targets are the overseas networks, in China and elsewhere, that keep the regime financially viable.

Russia

Russia is the country that gave kleptocracy its modern political meaning in the West. The chaos of Soviet collapse in the 1990s produced one of the fastest and most consequential transfers of wealth in modern history. Privatization of state assets through opaque and often rigged processes enriched a narrow class of insiders at a fraction of their true value. The notorious loans-for-shares deals did not merely create billionaires overnight. They established the post-Soviet template in which political access, legal manipulation, and control over state assets underpinned the illusion of political and economic liberalization.

When Vladimir Putin came to power, the rest of the world saw him as a kind of frontman or referee for the competitive oligarchy that really ran Russia. But he soon embarked upon the dangerous and violent process of subordinating the oligarchs and consolidating power around himself. Those who challenged Putin sooner or later found themselves expropriated, exiled, imprisoned, or worse. Those who bent the knee and stayed out of politics generally kept their fortunes and were allowed to acquire the assets of those whom the Kremlin had expropriated.

Over time, the military and security services that had risen alongside Putin and owed their positions to his patronage—known as the siloviki—became the regime’s new power base. These were no less corrupt than the oligarch class, but they were less independently minded and shared Putin’s vision for restoring Russia’s supposed historical greatness.

The massive accumulation of wealth by Putin’s closest family and friends has been widely documented. Less well understood, at least in the West, is the shift whereby a handful of insider families increasingly staff the entire Russian state.^[37] The result is a regime whose participants demonstrate loyalty not only by financial patronage but also through ties of kinship and mutual vulnerability.

That system helps explain the strange resilience of Putinism. Russia’s kleptocracy is no longer a wild west of crony capitalism but a political order in which wealth and family connections reinforce one another. The state’s most powerful institutions, especially the security services, do not merely protect the regime but are its principal economic beneficiaries. They use state power to extract rents, adjudicate commercial conflicts in favor of connected parties, and move wealth upward through opaque networks.

This is one reason why estimates of Putin’s fortune vary so widely. The real issue is not what he owns but who he controls.

The Ukraine War

Russia’s full-scale invasion of Ukraine in February 2022 was supposed to demonstrate the strength of Putin’s system. It has instead exposed the regime’s most dangerous structural weaknesses while creating new opportunities for predation that may prove almost as consequential as the war itself. The Russian military’s disastrous early performance around Kyiv was not merely a planning failure but a reflection of how prolonged kleptocratic rule erodes hard power. The military concealed its corruption in peacetime through parades, exercises, and doctored readiness reports. War is less forgiving: Russia’s inability to achieve a rapid decapitation victory exposed deep problems with its logistics, procurement, maintenance, and command culture.

The war has since forced the Kremlin to acknowledge, however obliquely, the problem’s existence. The 2024 arrest of Deputy Defense Minister Timur Ivanov on bribery charges was the clearest sign of a broader corruption scandal inside the defense establishment.^[38] Additional arrests and bribery confessions involving senior military officials followed, including figures responsible for personnel, logistics, and procurement.^[39] When Putin replaced Sergei Shoigu with the economist Andrei Belousov in May 2024, the move reflected concern that soaring defense spending needed tighter control and better results.^[40]

The war has both exposed corruption and accelerated it. Defense spending has surged, and with it the flow of contracts, subcontracting chains, and emergency procurement decisions that create ideal conditions for skimming, kickbacks, and inflated pricing has also increased. Reuters reported in 2025 that defense accounted for roughly 32 percent of Russia’s federal budget,^[41] an extraordinary concentration of public resources in a sector already rocked by graft scandals.

In occupied Ukrainian territory, politically connected contractors and occupation officials operate with minimal transparency and no meaningful accountability. These territories are not only military zones but become patronage rewards as reconstruction, procurement, and extraction become new channels for illicit enrichment.

Western sanctions, meanwhile, have generated a thriving evasion industry. The shadow fleet of aging and opaque oil tankers carrying Russian crude to India, China, and elsewhere has become one of the defining commercial phenomena of the war economy. Servicing it has created a gray market for intermediaries not only in Russia but also in the UAE, Turkey, Hong Kong, and elsewhere. They arrange flagging, insurance, ship-to-ship transfers, and payment processing outside normal Western systems.

The same is true of technology procurement. China and Hong Kong remain major transshipment hubs for restricted electronics and dual-use items reaching Russia. So while sanctions pressure has constrained Moscow, it has also created new rents for brokers, traders, and logistics operators.^[42]

This is a recurring feature of Western efforts to constrain kleptocracy. Attempts to isolate a regime raise the value of access to its black and gray markets, enriching a new class of profiteers with a material interest in prolonging conflict. The Wagner model and Yevgeny Prigozhin’s rise from favored restaurateur to international warlord was the clearest manifestation of this. Wagner’s African operations increased Russian influence without directly implicating the Kremlin, while also giving opportunities to commercial enterprises tied to mining, transport, and security services.^[43] Prigozhin’s death did not end that model but placed it more directly under Kremlin control.

Implications for US Policy

The international response to Russia’s invasion produced the most significant kleptocracy-targeting operation in modern history. The multilateral Russian Elites, Proxies, and Oligarchs Task Force immobilized about $300 billion in Russian Central Bank assets and blocked or frozen more than $30 billion in sanctioned Russians’ assets.^[44] But freezing is not seizing, and the legal and political obstacles to actual transfer have too often become excuses for drift. While the Group of Seven’s decision to back a $50 billion loan to Ukraine with windfall profits from immobilized Russian assets was a useful step, it hardly touched the principal.

The United States should confront Russia’s money laundering and sanctions evasion networks not as isolated sanctions problems but as part of a long-term containment strategy. The Putin regime has proved far more durable than most Western observers ever believed possible, and it will not change without economic crisis, political upheaval, and cultural reckoning within Russia itself. These hardly seem imminent. Unlike in Cuba and Iran, Russia’s population seems to have become inured to the corruption of its ruling class and resigned to its entrenchment.

In practice, this means maintaining and aggressively enforcing the existing sanctions regime while pushing Europe to do more to end its energy reliance. It also means targeting Russia’s growing dependence on China as its chief customer and financial facilitator, as well as its relationships with the UAE, Turkey, and other financial hubs that turn a blind eye to illicit Russian financial networks.

Venezuela

Venezuela sits atop some of the greatest natural wealth on earth. It holds the world’s largest proven crude oil reserves along with significant deposits of gold, bauxite, coltan, and other minerals. Under competent governance, these resources should have underwritten generations of prosperity.

In the middle decades of the twentieth century, Venezuela was indeed one of Latin America’s wealthiest and most modern states, a destination for immigrants, foreign capital, and political exiles. The story of its collapse is perhaps the most egregious case study of how the so-called resource curse can reduce a prosperous society to humanitarian catastrophe within a generation.

Hugo Chávez’s Bolivarian Revolution did not begin as a nakedly criminal enterprise but as a populist project that sought to redirect oil revenues toward social spending and political patronage, funded by a commodity boom that briefly made the model look sustainable. But the decisions Chávez made in the early years of his rule proved fatal to the state’s long-term viability. He subordinated the judiciary, packed institutions, and most consequentially, hollowed out the professional management of Petróleos de Venezuela, S.A. (PDVSA), the state oil company that had long functioned as the engine of the Venezuelan economy. In 2003, he dismissed 18,000 to 20,000 employees, including many of the company’s most experienced engineers and managers, and replaced them with political loyalists.

That moment was not simply a labor purge. It marked the transformation of PDVSA from a national oil company into a patronage machine. Once he dismantled the institutions that might have constrained predation, the shift from redistribution to looting became inevitable.

When oil prices were high, the regime could disguise mismanagement with spending. When prices fell, the same networks that had distributed rents through political patronage simply turned to extraction on a more desperate basis. US court filings and Justice Department cases have documented billion-dollar schemes involving bribery, fraudulent currency exchanges, corrupt loans, and the laundering of proceeds through US and international financial institutions.

The consequences for Venezuelan society were catastrophic. Hyperinflation wiped out the middle class. Public services collapsed. The healthcare system deteriorated under the weight of shortages, corruption, and state failure. By 2025, the United Nations Office of the High Commissioner for Refugees estimated that nearly 7.9 million Venezuelan refugees and migrants had left the country, making this one of the largest displacement crises in the world.^[45]

The criminalization accelerated under Nicolás Maduro. As legitimate oil revenues dwindled, the regime relied increasingly on illicit and semi-illicit streams: sanctions-evasion schemes, opaque commodities trading, patronage contracts, and especially illegal mining. The Orinoco Mining Arc became the clearest symbol of this transformation. Armed state and nonstate actors, criminal syndicates, and military officials profit from gold extraction in southern Venezuela while local populations bear the costs in violence, extortion, and environmental destruction.^[46]

Venezuela’s problem is no longer only ideological misrule. It is the entrenchment of patronage networks, criminal revenue streams, and corrupted institutions that will survive leadership change if the international community does not challenge them.

The spectacular operation by US Special Forces to extract Maduro from Caracas should mark a triumphal moment in US counter-kleptocracy history. But only a swift and genuine transition to democratic governance—with the threat of US reprisals if the new regime undermines it—can secure the peaceful and prosperous future that Venezuelans crave and deserve.

3. Challenges and Opportunities

The Challenge of Multipolarism

The international system that the United States inherited after the Cold War was never as stable or universal as it sometimes appeared. Even at the height of American predominance, Washington could not compel every government to embrace liberal governance or rule-of-law reforms. But it did enjoy a structural advantage. The United States sat at the center of the world’s most important financial, military, and technological networks, and the broad direction of international economic integration generally favored states willing to align with Western standards of transparency, market competition, and institutional accountability.

That advantage did not eliminate corruption, but it did establish opposition to it as a global standard. Governments that wanted access to Western capital, development assistance, trade, and political support often had to contend, at least in some measure, with Western expectations of governance.

But the emergence of China as a truly global economic and political power has upended this arrangement. Beijing provides authoritarian and hybrid regimes with a source of support that does not require them to submit to Western governance expectations. A ruler who once feared losing access to investment or development assistance because of corruption or repression may now calculate that Beijing offers a less intrusive and more politically convenient option. China does not always replace the West, but it dilutes the leverage that the West once enjoyed.

The result is not merely a more competitive world but one in which corruption has become more effective and valuable as a tool of foreign policy. It creates opaque channels through which elites can do business—political and personal—without subjection to institutional constraints or public scrutiny.

The so-called middle powers can also use this environment to pursue balancing strategies that reduce US influence. States such as the UAE, Singapore, and Turkey do not need to align formally with China to benefit from the rivalry. They can position themselves as intermediaries between rival blocs while profiting from money laundering and sanctions evasion. In a more multipolar system, this kind of hedging becomes easier and more lucrative.

Western democracies themselves are vulnerable. Economic dependence on China, especially in investment, trade, education, and technology, can create constituencies inside democratic states that prefer accommodation to scrutiny. The challenge here is subtler than in the developing world. It is not always overt bribery but a gradual form of elite capture in which financial relationships, institutional dependencies, and market incentives encourage self-censorship or opposition to tougher policy.

Multipolarity changes the incentives facing governments and elites. In a world with more patrons and more financing options, it becomes harder for the United States to use anti-corruption and rule-of-law tools as leverage if it cannot offer sufficiently attractive alternatives. And it becomes more likely that actors who see opacity as an asset rather than a defect will shape international institutions, technical standards bodies, and development pathways.

While multipolarity is not inherently unfavorable to the United States, Washington should compete differently. The United States needs to demonstrate that transparency and rule of law produce concrete strategic and economic advantages. It should also clarify that the apparent convenience of Chinese-style political finance and state-backed development carries long-term costs in the form of dependency, corruption, and diminished sovereignty.

The Evolving Global Financial System

American economic statecraft rests on structural advantages that are easy to take for granted. The United States remains at the center of the global financial system; the dollar is still the leading reserve currency; US markets remain the deepest and most liquid; and a large share of cross-border trade and finance still runs through institutions, payment rails, and compliance expectations shaped by Washington and its allies. The Federal Reserve’s 2025 review found that “the dollar’s international usage is little changed” across the main measures that matter, even as geopolitical and technological pressures mounted.^[47]

That centrality gives the United States two kinds of power. First, it creates visibility. Illicit actors moving money across borders often still have to touch banks, clearing systems, or service providers exposed to US jurisdiction and enforcement. Second, it creates enforceability. Access to dollar clearing, correspondent banking, and reputable Western financial institutions is valuable enough that sanctions, prosecutions, and exclusion measures can impose real costs.

The challenge here is not that the dollar is about to collapse but that the global financial environment is becoming more fragmented, more technologically complex, and more hospitable to routing around traditional choke points. As a result, money launderers and sanctions evaders have more options, placing a heavier burden on intelligence and enforcement. Illicit actors are increasingly exploiting newer payment mechanisms, legal entities, and cross-border structures faster than regulators and law enforcement can adapt.

Digital assets are the clearest example. They have not replaced the dollar as the organizing currency of the world economy, but they have created alternative rails that matter for illicit finance. The Financial Action Task Force’s 2024 update found growing use of mixers, cross-chain bridges, decentralized finance arrangements, stablecoins, and over-the-counter brokers in jurisdictions with weak supervision. Those tools do not eliminate the need to convert to fiat currency eventually, but they reduce friction, increase speed, and raise the number of nodes an investigator must map before identifying the real beneficiary. That makes sanctions and anti-money laundering enforcement more complex and more time-sensitive.

At the same time, the digital-asset story is not only a threat. It may also contain an important opportunity for the United States. Dollar-backed stablecoins already dominate the stablecoin market, a point that April 2025 Treasury Borrowing Advisory Committee materials noted, describing “USD stablecoins” as the dominant form in the sector and highlighting their growing policy significance.^[48]

More recently, Treasury publicly argued that a US stablecoin framework could help “reinforc[e] USD dominance,” and its 2025 year-in-review page described the July 18 stablecoin framework as doing exactly that.^[49] With proper regulation and supervision, dollar-backed stablecoins could extend the reach of dollar usage into new payment environments rather than undermine it, effectively creating a new digital layer of demand for dollar-linked assets and prolonging the currency’s global centrality. That is not guaranteed, and it depends on strong controls to prevent money laundering and terrorism financing, prudential safeguards, and clear legal standards. But it is a genuine strategic possibility.

The real question is whether the United States can shape innovation early enough that new rails remain anchored in the dollar system and subject to credible compliance expectations, rather than allowing alternative ecosystems to develop in ways that dilute both visibility and leverage.

Artificial intelligence is likely to intensify all these pressures. AI can help law enforcement and compliance teams identify suspicious activity faster, but it will also help adversaries optimize transaction routing and build more convincing false identities and document packages. The result will be a more intensive contest between detection and deception.

The United States will need a much more aggressive and organized operational approach than is currently the case, combining financial intelligence, data fusion, analytics, and rapid interagency action to keep pace with adaptive illicit networks. Treasury’s recent work on digital assets and illicit finance points in that direction, emphasizing the need to pair innovation with strong standards and enforcement.

The United States cannot preserve the effectiveness of sanctions, anti-money laundering tools, and broader financial coercive power simply by relying on the legacy architecture of dollar dominance. It will need to defend and modernize that architecture simultaneously. That means closing domestic regulatory loopholes, aligning standards with those of allies, and treating new financial technologies as a front line of strategic competition with China and other adversaries. It also means recognizing that some innovations, including properly regulated dollar-backed stablecoins, carry the potential to strengthen rather than weaken American financial primacy.

Perceptions of Corruption

Corruption has both material and psychological dimensions. It matters whether public money is stolen, but it also matters whether citizens believe their institutions are transparent and accountable, whether they trust the information they receive about abuses, and whether they think accountability is possible.

In a digital information environment increasingly shaped by algorithmic amplification and synthetic content, that second dimension is becoming more important. The political effects of corruption are now often mediated less by court judgments or newspaper investigations than by viral narratives, leaked images, manipulated clips, and competing claims about who is lying, who is looting, and who is trustworthy.

This creates a double-edged challenge for the United States and its allies. On the one hand, new technologies make it easier to document and expose corruption to the public. On the other hand, the same technologies make it easier for authoritarian states and criminal networks to manipulate perceptions and undermine confidence in the very idea of verifiable truth.

Russia is the primary exponent of this approach. Having failed to hide its own egregious venality, the regime’s objective is to make corruption feel universal, unavoidable, and impossible to prove with confidence. If it can dismiss every allegation as propaganda, every leak as fabricated, and every investigation as politically motivated, then public cynicism itself becomes a form of regime protection.

This poses a particular challenge for a US counter-kleptocracy strategy. Exposing corruption remains one of the most effective ways to weaken authoritarian legitimacy and disrupt illicit networks. But exposure now competes in a far more contested information space. To succeed, it has to be fast, credible, and institutionally anchored. Governments need repeatable mechanisms for documenting ownership, authenticating evidence, and explaining complex financial misconduct in ways ordinary audiences can understand.

The broader lesson is that corruption in the information age is no longer only about what rulers steal. It is also about what they can persuade people to believe about impunity and accountability. A successful US counter-kleptocracy strategy should therefore defend not only financial integrity but informational integrity.

Policy Recommendations

Boosting US Capabilities

America’s ability to detect and disrupt illicit financial networks depends on continually strengthening its own anti-money laundering and financial transparency framework. That begins with tackling the pervasive role of shell companies in concealing illicit financial activity. In practice, this means revisiting the US Beneficial Ownership Information register, which the Trump administration effectively shelved in early 2025. Without a functioning mechanism to identify the real owners of legal entities, the United States leaves uncontested one of the most basic and widely exploited channels for financial crime.

The United States should also extend anti-money laundering obligations to high-risk non-bank sectors. The law requires banks and other financial institutions to maintain anti-money laundering programs and report suspicious transactions to the Treasury, but comparable requirements still do not apply to several high-risk professions, including lawyers, investment advisers, and art dealers. That gap is well-known, and financial criminals seeking to move and store wealth outside the most heavily regulated parts of the financial system readily exploit it.

At the same time, policymakers should make the private sector a more effective first line of defense. The Bank Secrecy Act regime remains the global benchmark, but it has developed piecemeal over decades and now imposes substantial duplication and unnecessary compliance burdens. Too often, examiners prioritize box-ticking over real assessments of whether anti-money laundering programs actually work. Reform should focus on effectiveness rather than process while enabling banks to share more information with law enforcement, and with one another where appropriate. This way, they can identify and disrupt suspicious activity before funds disappear.

The United States should also modernize its foreign lobbying disclosure regime. Kleptocratic systems use lobbyists, public relations professionals, and informal intermediaries to shape US policy and public debate. Efforts to prohibit such activity outright would run into serious legal and constitutional obstacles, but stronger disclosure requirements are both feasible and necessary. In particular, the overlap between the Lobbying Disclosure Act and the Foreign Agents Registration Act has produced confusion and has insufficiently regulated important gray areas. A clearer, more coherent disclosure framework would make it harder for foreign authoritarian interests to operate through opacity.

Strengthening Allies and Partners

The United States and its partners cannot realistically compete with the scale of Chinese capital or with the illicit opportunities for self-enrichment that Beijing often offers local elites. They can, however, compete by offering what Beijing’s model cannot: quality, standards, transparency, and long-term sustainability. Washington should expand efforts to mobilize private capital with the backing of the safeguards and institutional credibility that Western systems, and the United States in particular, can provide. This includes making fuller use of the US International Development Finance Corporation and related tools to offer alternatives to predatory financing arrangements.

The timing is favorable. Around the world, governments and publics are becoming more aware that Chinese financing and construction often carry hidden costs: unsustainable debt, opaque contracting, poor governance outcomes, and opportunities for elite capture. The United States should seek to compound these vulnerabilities by exploring whether, in narrow and carefully defined circumstances, it should recognize the concept of odious debt. Public liabilities incurred by corrupt elites to enrich themselves through opaque deals with Beijing can burden societies for decades. Refusing to recognize the legitimacy of such arrangements in selected cases could help undermine the coercive logic of Belt and Road debt diplomacy.

Washington should also restore, reform, and expand support for independent journalists and civil society organizations that expose corruption in vulnerable democracies, hybrid regimes, and authoritarian states. The cross-border collaborative model that the International Consortium of Investigative Journalists pioneered has transformed the way reporters investigate, document, and communicate about corruption to global audiences. It is one of the most effective tools available for exposing authoritarian kleptocracy. The National Endowment for Democracy and its core institutes, badly weakened by foreign assistance cuts, remain the most natural and effective vehicles for channeling support to these actors.

The US government itself also has an important role to play. It should provide diplomatic backing and practical protection to embattled journalists. This includes pressing other countries to adopt laws that prohibit strategic lawsuits against public participation (anti-SLAPP laws) that offer protections broadly comparable to those Americans enjoy under the First Amendment. More broadly, when political openings emerge, the United States should be prepared to move quickly with technical and financial assistance to help newly pro-Western democratic governments consolidate the rule of law, reverse state capture, and secure public confidence. Hungary illustrates the potential stakes: The ouster of pro-Kremlin strongman Viktor Orbán has created an opportunity for a new, pro-Western government to unwind a system of entrenched corruption that long appeared irreversible.

Targeting US Adversaries

America’s unique ability to impose meaningful costs on foreign adversaries through sanctions and other economic measures rests on the centrality of the US financial system to global markets, and on the ubiquity of the dollar in particular. Preserving dollar dominance is a much broader strategic imperative than countering kleptocracy alone, but it remains indispensable to any serious effort in this domain.

In the case of Cuba, Iran, and Venezuela, the immediate strategic objective should be to increase pressure on regimes while supporting pathways to a democratic, pro-Western transition. That requires focusing and maintaining maximum-pressure sanctions on the most lucrative regime revenue streams. Importantly, Washington should state more clearly and often that it does not prohibit food, medicine, or other humanitarian imports to these countries; shortages persist because the regimes themselves choose not to prioritize civilian welfare.

The United States can also demonstrate that it would be a responsible long-term partner by establishing dedicated asset forfeiture funds for these countries. A Fund for the Venezuelan People, for example, could pool billions of dollars seized from Chavista kleptocrats and reserve those assets for humanitarian use or eventual repatriation in the event of a democratic transition. Such mechanisms would both sharpen the contrast between regime predation and US policy and create a practical bridge to post-authoritarian recovery.

China, Russia, and North Korea require a different approach. These regimes are more resilient to external economic pressure, and regime change in the near-term is unlikely. Therefore, the US should treat counter-kleptocracy policy as one component of a broader strategy to contain and degrade their capabilities. In these cases, the objective is not necessarily transition but erosion.

The US intelligence community should more aggressively identify and exploit corruption-related weaknesses inside these regimes. In particular, it should focus on where corruption undermines military effectiveness, distorts technological development, or degrades other strategically important sectors. The aim should not simply be to expose graft but to deepen elite suspicion that critical institutions are less capable, less prepared, and less reliable than they outwardly appear. Paranoia of this kind can impose real costs. It can sharpen distrust within ruling circles, force regimes to spend time and political capital policing their own systems, and divert attention from external aggression. The obvious and immediate priority, in this regard, is deterring a PLA invasion of Taiwan.

Amplifying information about regime corruption can raise domestic pressure and intensify popular resentment, even in relatively closed societies. That is more difficult in cases such as China and North Korea, but not impossible. In 2019, President Trump authorized the Central Intelligence Agency to circumvent China’s Great Firewall and post material on social media about CCP corruption, triggering a sharp reaction before censors shut it down.^[50] Authorities of this kind should be institutionalized and standing across America’s principal authoritarian adversaries.

Even when such efforts do not produce immediate political effects, they force regimes onto the defensive and highlight one of the few vulnerabilities these systems consistently struggle to conceal.

Conclusion

The United States cannot afford to treat kleptocracy as a secondary governance issue, still less as a sentimental holdover from the democracy-promotion agenda of a different era. In the current strategic environment, kleptocracy is a core feature of how America’s principal adversaries govern, project influence, evade external pressure, and protect themselves from internal challenge. It helps sustain military aggression, corrodes institutions abroad, distorts global markets, and weakens the rules-based order on which US prosperity and security depend.

That reality requires a more disciplined approach. A serious counter-kleptocracy strategy is not about trying to eradicate corruption everywhere or assuming that exposure alone will topple hostile regimes. It is about understanding where corruption is a source of strength for adversaries, where it is a source of vulnerability, and how the United States can concurrently use its financial power, law enforcement and intelligence capabilities, and strategic communications reach to exploit that fact.

For allies and partners, this means helping build resilience against illicit finance and its political consequences. For adversaries, it means increasing the costs of kleptocratic rule, disrupting the networks that sustain it, and turning opacity, distrust, and patronage into liabilities rather than advantages. In an era of renewed great-power competition, counter-kleptocracy is not a distraction from hard power—but one of the ways in which the United States can use power more intelligently.

Endnotes

1. United States Strategy on Countering Corruption (White House, 2021), https://bidenwhitehouse.archives.gov/wp-content/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf. ↑
2. “About,” Caucus Against Foreign Corruption and Kleptocracy, accessed June 5, 2026, https://counterkleptocracycaucus-joewilson.house.gov/about. ↑
3. “Putin Tells Russian Business People He Had No Choice over Ukraine,” Reuters, February 24, 2022, https://www.reuters.com/world/europe/putin-tells-russian-business-people-he-had-no-choice-over-ukraine-2022-02-24/; “Meeting with Representatives of Russian Business Circles,” President of Russia, February 24, 2022, http://en.kremlin.ru/events/president/transcripts/67846. ↑
4. Vivian Nereim, “Trump’s Pledge to the Middle East: No More ‘Lectures on How to Live,’” New York Times, May 14, 2025, https://www.nytimes.com/2025/05/14/world/middleeast/trump-middle-east-nation-building.html. ↑
5. Joel Schectman, Kristina Peterson, Laura Kusisto, and Alexander Ward, “How Trump Gutted America’s $40 Billion Aid Agency in Two Weeks,” Wall Street Journal, February 4, 2025, https://www.wsj.com/politics/policy/how-trump-musk-doge-killed-usaid-b649f1f5. ↑
6. “What Is Corruption?,” Transparency International, accessed June 2, 2026, https://www.transparency.org/en/what-is-corruption. ↑
7. “Kleptocracy,” Merriam-Webster Dictionary, updated April 18, 2026, https://www.merriam-webster.com/dictionary/kleptocracy. ↑
8. Determination of Foreign Adversaries, C.F.R. § 791.4. ↑
9. Wealth and Corrupt Activities of the Leadership of the Chinese Communist Party (Office of the Director of National Intelligence, March 2025), https://www.dni.gov/index.php/newsroom/reports-publications/reports-publications-2025/4056-report-prc-ccp-leadership. ↑
10. Yuen Yuen Ang, China's Gilded Age: The Paradox of Economic Boom and Vast Corruption (Cambridge University Press, 2020). ↑
11. Thomas J. Duesterberg, “How the Chinese Economy Works. How It Harms Its Own People and the Market-Oriented Economies. And How to Counter It,” Hudson Institute, March 19, 2026, https://www.hudson.org/economics/how-chinese-economy-works-how-it-harms-its-own-people-market-oriented-economies-how-tom-duesterberg. ↑
12. “Xi Jinping Millionaire Relations Reveal Elite Chinese Fortunes,” Bloomberg, June 29, 2012, https://www.bloomberg.com/news/articles/2012-06-29/xi-jinping-millionaire-relations-reveal-fortunes-of-elite. ↑
13. David Barboza, “Billions in Hidden Riches for Family of Chinese Leader,” New York Times, October 25, 2012, https://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-holds-a-hidden-fortune-in-china.html. ↑
14. Peter Martin and Jennifer Jacobs, “US Intelligence Shows Flawed China Missiles Led Xi to Purge Army,” Bloomberg, January 6, 2024, https://www.bloomberg.com/news/articles/2024-01-06/us-intelligence-shows-flawed-china-missiles-led-xi-jinping-to-purge-military. ↑
15. Elliott Ji, “Rocket-Powered Corruption: Why the Missile Industry Became the Target of Xi’s Purge,” War on the Rocks, January 23, 2024, https://warontherocks.com/rocket-powered-corruption-why-the-missile-industry-became-the-target-of-xis-purge. ↑
16. Laurie Chen, “China Purges Senior Military Official Miao Hua from Top Ruling Body,” Reuters, June 27, 2025, https://www.reuters.com/world/china/china-purges-senior-military-official-miao-hua-top-ruling-body-2025-06-27. ↑
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