Economic Crime and Illicit Finance in Russia’s Occupation Regime in Ukraine

By David Lewis

Despite Ukraine's ongoing counter-offensive, in September 2023 Russia still controlled around 17% of Ukrainian territory, an area roughly the size of Denmark. Russia's occupation of these Ukrainian territories relied primarily on repression and violence, but economic levers also played an important role in consolidating Russian rule. This paper details Russia's illicit economic activity in the occupied territories and calls for more international attention to this aspect of Russia's invasion. Since Russia occupied large parts of south-eastern Ukraine in March 2022, it has worked rapidly to incorporate these regions into Russia's economic and financial system. Key elements in this 'economic occupation' include: • The seizure of many Ukrainian businesses and assets. The occupation authorities 'nationalised' many companies and re-registered them as Russian businesses with new management. • The imposition of the Russian currency, financial and tax system, and the forced closure of Ukrainian banks. • The forcible takeover of farms or pressure on farmers to cooperate with the occupation authorities. Russian officials oversaw the illegal export of Ukrainian grain from the occupied territories. • The reconstruction of cities such as Mariupol, the city destroyed by Russian forces in spring 2022, in a multi-billion-dollar government programme that is profiting well-connected Russian companies. These acts were all illegal under Ukrainian law and some may constitute potential war crimes under international law. There should be more attention paid to these economic crimes internationally – with clear warnings for Russian business about the consequences under international law of seizing Ukrainian businesses and assets. Although international sanctions have targeted many officials in the Russian occupation structures, the approach should be more coordinated and systematic to raise the costs of Russian occupation. More international attention now would also assist in eventual reintegration and reconstruction of these regions. For example, a database of business seizures and economic crimes in the occupied territories would help to resolve legal issues and ensure business restitution in the aftermath of the war, while also serving as a potential basis for sanctions and eventual prosecutions. The economic aspects of occupation also raise complex questions of transitional justice for those who lived under Russian occupation. Ukrainian society is discussing how to define and respond to acts of collaboration in the occupied territories. International experience could help to inform legal and political solutions that meet the needs of justice but also seek to unite post-war Ukrainian society  

SOC ACE Research Paper No 20. 

Birmingham, UK: University of Birmingham , 2023. 43p.