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“Volodymyr, can you hit Moscow?” the US president reportedly asked his Ukrainian counterpart in a call on July 4. Revelations of the conversation may have ruffled feathers in the Kremlin, but Vladimir Putin’s government has been strengthening its hold on large swaths of Ukraine — using the financial system as a crucial tool.
International war crimes prosecutors have so far focused their efforts on politicians and generals, rather than financial executives and central bank officials. Is it time for a change of tack?
How banks became a vital tool in Putin’s war
Think of war crimes and you probably picture bombs and bullets. But your mental image should also make space for bank branches and ATMs.
That’s the logic of a new submission to the International Criminal Court by non-profit legal group LexCollective, calling for a new focus on the Russian financial system’s role in the invasion and occupation of south-eastern Ukraine.
The ICC started an investigation into alleged Russian war crimes and crimes against humanity in Ukraine less than two weeks after the all-out invasion began in February 2022. So far it has issued six arrest warrants — against President Vladimir Putin and four top military officials, and another senior official accused of overseeing the forced removal of Ukrainian children.
But the new filing to the ICC — which was submitted yesterday and has not previously been reported — argues that the investigators must broaden their scope to probe how Russia is using the banking system to consolidate control over illegally occupied areas of Ukraine.
“Russia has a pretty clear strategy, which is applied each time there’s a new region that they seek to occupy or annexe,” said Kristin Rosella, co-executive director of LexCollective, which authored the filing with backing from civil society bodies B4Ukraine and the Ukrainian Legal Advisory Group. “Shortly after the occupation begins, the banking structures come pretty quickly, within a few months.”
The filing, which focuses on the occupied region of Ukraine’s Kherson province, accuses the heads of three Russian or Russian-controlled banks — MRB Bank, Promsvyazbank and CMR Bank — of being at the centre of this strategy. After Russia seized control, the filing says, it outlawed the use of the Ukrainian hryvnia, which residents had to convert into roubles (at an artificially depressed exchange rate, resulting in an effective wealth transfer from the local residents to the Russian banks).
In order to open a bank account to access any sort of financial services — whether to keep running a small business, or to receive pension payments — residents had to take Russian citizenship and obtain a Russian passport, the filing claims. It says this is part of a deliberate strategy whereby the occupying forces “conditioned access to essential services . . . on pledging allegiance to Russia”, in violation of international law.
The filing calls for action against Russia’s finance minister Anton Siluanov, and the governor and deputy governor of the Russian central bank — in relation to the allegations mentioned above, as well as their wider work to finance and facilitate the invasion and occupation. The filing cites reports that the central bank has established field offices in the occupied regions, to facilitate payments to combat troops.
“I don’t think people spend enough time analysing how Russia manages to finance the war,” Anna Vlasyuk, a lawyer at the Kyiv School of Economics who contributed to the filing, said.
A Ukrainian marine unit in action in Kherson last summer. A large part of the region remains under Russian control © Getty Images
The filing was made under Article 15 of the Rome Statute, which allows private parties to submit information to the ICC about alleged international crimes. Hundreds of these have been made each year — a number that mushroomed to more than 15,000 in the 12 months to last October — with only a very small number of these being taken forward by the body’s investigators.
Federica d’Alessandra, an international law expert at Oxford university and the Carnegie Endowment for International Peace, pointed out that an indictment along the lines suggested above would be almost unprecedented.
Corporate and financial institutions and officials have faced action at national level in connection with war crimes. Notably, French bank BNP Paribas paid an $8.9bn US penalty in 2014 for providing sanctions-busting services to Omar al-Bashir’s notorious Sudanese regime (and Iran and Cuba). But such a prosecution has not happened in an international tribunal since the Nuremberg trials that followed the second world war, added d’Alessandra, who was not involved in this new submission.
“If the ICC did decide to take the case forward, they would certainly be contributing enormously to breaking new ground in an area of law that is rarely used. But because of that, they would also face significant hurdles in tying their decisions to existing precedent — precisely because there’s so little of it,” she said.
Even if the ICC does act on the evidence submitted in this filing, it seems unlikely that any of the accused parties will end up on trial in The Hague any time soon, unless they’re foolish enough to travel to a country willing to arrest and extradite them. (Requests for comment to the accused parties, sent to their respective institutions, were not answered.)
But an ICC indictment over these alleged financial crimes could still have an important impact. Vlasyuk noted that it could feed into the ongoing debate about what to do with frozen Russian central bank assets in Europe and the US. An ICC indictment of that institution’s leadership would highlight the fact that it has been using its resources to support the war effort, rather than “for the benefit of the Russian people”, she argued — thereby strengthening the case for confiscating the funds and diverting them for reconstruction in Ukraine.
It could also have a chilling effect on the appetite of foreign financial institutions to keep doing business with Russia’s government and banks. While most US and EU banks have ended or dramatically reduced their business in and with Russia, a few — notably Austria’s Raiffeisen Bank International, Italy’s UniCredit and Hungary’s OTP Bank — still retain substantial banking operations in the country. (Those banks have all expressed a willingness or desire to exit Russia, but have said that bureaucratic and legal hurdles have so far made it impossible to do so without a near total loss — which would in effect amount to a huge financial transfer to the Kremlin.)
For others, it would strengthen the incentive to avoid even indirect links with the Russian financial system, Rosella argued. While banks and other financial institutions are long practised in handling risks around money laundering and related offences, “crimes against humanity are less familiar to the financial industry”, she added. “It’s a blind spot they didn’t know they had.”
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