State “Decapture”: The Moldovan Story

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The tiny, post-Soviet nation of Moldova has long been considered the paradigmatic case of state capture. Since independence the country has been beset by weak institutions coupled with a deep cleavage over national identity. These conditions have made it easy for government leaders to put the state’s machinery to use to enrich themselves, their relatives, and cronies. In common parlance, to capture the state.

But an amazing turnaround has been underway since 2021. A new pro-Western party, the Party of Action and Solidarity, came to office and with the support of the European Union began taking measures to free the state machinery from elite control. To decapture it if you will.

Liam O’Shea chronicles the decapturing in new report for the Global Initiative Against Transnational Organized Crime (here). Senior figures from earlier administrations – among them a former president and a former prime minister — have been prosecuted for corruption; judges and prosecutors vetted; anti-corruption bodies empowered, and new and tighter controls put on political finance.

“Centralized state capture,” O’Shea writes, “no longer exists. . . . Criminal actors no longer obtain political protection, no evidence has surfaced since 2021 of collaboration between senior political figures and organized crime, and the state constrains these markets more effectively than at any point in the post-Soviet period.”

“Decapture” may today be a nonce word, but anticorruption activists can hope that with more examples like Moldova it will soon take its place in English dictionaries.

Multistakeholder Exchange: Corruption Linked to Organized Crime, 27 October 2026

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The links between organized criminal gangs and corruption is a topic of growing concern. At the instance of the permanent missions to UNODC of Italy and Mexico, an online and in person meeting to gather input from civil society is being organized by UNODC October 27.

It will be at the UNODC office in Vienna, 11 a.m. to 12:30 p.m. Central European Time. All welcome to attend.

Invitation with details here. Draft proposed conclusions here.

TI-US to FinCEN: Don’t Abandon the Crypto Mixer Rule

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Under the Biden Administration, FinCEN, the agency that writes and enforces U.S. anti-money laundering rules, proposed a rule aimed at cracking down on the use of foreign cryptocurrency mixers (Convertible Virtual Currency mixing services in money laundering parlance). Mixers obscure the source, destination, or the amount of a crypto transaction. That makes them a go-to tool for ransomware gangs, sanctions evaders, corrupt officials, and drug traffickers (here).

U.S. law requires anyone taking custody of customers’ funds — as mixers must do to mix — to register with FinCEN and verify customers’ identities. This defeats the purpose of mixing. As a result, no U.S. company openly operates a mixer, and those who have run one covertly have been prosecuted for money laundering and related federal crimes.

But while many countries are cracking down on mixers, not all are. So Americans with something to hide can still find a foreign service to route their crypto through.

To make that less likely, the Biden-era proposal would have required any U.S. financial institution to report within 30 days of detection any transaction it “knows, suspects, or has reason to suspect” involved mixing in a foreign jurisdiction. On October 6, the Trump Administration withdrew that proposal, along with a 2020 proposal requiring reporting on crypto transfers to and from self-hosted wallets (here). Both proposed rules would have made it harder for Americans, and anyone dealing in U.S. dollars, to hide their crypto dealings.

On October 8 Transparency International’s U.S. chapter sent FinCEN a strongly worded, well-argued letter urging it to reinstate the Biden-era proposals and to take further steps against the abuse of digital assets. A copy of the letter is here.

Addressing Institutional Corruption: International Selection Commissions in Ukraine:

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GAB is pleased to welcome this Guest Post by David Bernstein, an international development consultant and lawyer who spent more than 30 years working on rule of law, governance, and anticorruption programs at the State Department, the EBRD, and the World Bank. He recently served as one of the three international commissioners on the Selection Commission for the Head of Ukraine’s State Customs Service (SCS).

Our Commission was tasked with identifying two candidates to head the SCS from a list of finalists we were given. After interviewing the first few, my fellow international commissioners and I worried that we would be hard pressed to find even one to recommend to the Finance Minister and the Cabinet of Ministers; our potential dilemma was the Customs Code required us to name two. Fortunately, in the end we did find two, both investigators from the National Anti-Corruption Bureau (NABU): Ruslan Damentsov and Orest Mandziy. On April 10, 2026, the Cabinet, acting on the Finance Minister’s recommendation, appointed Mandziy as head of the SCS (the decision is here; the government’s announcement is here). Damentsov accepted the post of deputy head.

Ukraine pioneered the use of international experts to help select the heads of national agencies (here). Over the past several years, international experts have played a key role in selecting the heads of NABU, the Specialized Anti-Corruption Prosecutor’s Office, and the Economic Security Bureau, as well as the judges of the High Anti-Corruption Court (here). Ukrainian civil society, many members of the Verkhovna Rada, and key international donors believe that international participation in selection commissions can help combat systemic corruption in key institutions and build or sustain public trust in anticorruption and law enforcement agencies. This post describes how the process worked, why it was possible, and what lessons my experience on the SCS Selection Commission offers for the future.

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Italy’s Highest Court Quashes Conviction of Corruption Prosecutors: “Il fatto non sussiste”

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“The offence does not exist” (il fatto non sussiste). With those words, Italy’s Corte Suprema di Cassazione has righted a grave injustice done to Fabio De Pasquale and Sergio Spadaro.

The two Milan prosecutors were charged with withholding evidence that bore on the credibility of a key witness in their bribery prosecution of oil giants ENI and Shell. By failing to make it available to the defence, the charge went, they had committed the crime of refusing to perform official duties.

From the outset the case looked, as the decision says, “deeply flawed” and “legally untenable.”  Some of the material merely repeated what was already in the record, some was of doubtful reliability, and some the defense counsel acknowledged they already had. Many assumed the charges were brought to stop the two from appealing the trial court’s acquittal (despite strong evidence of wrongdoing). Insiders expected that once a new prosecutor took over the appeal (who then promptly dropped it – leaving defendants scot free) – the charges would be dismissed.

They were not. To the surprise even of some involved in the initial investigation, the case went to trial, De Pasquale and Spadaro were convicted, and the Brescia Court of Appeal upheld the conviction.

Italy’s Supreme Court has now vacated it. It held that neither of the statutes the lower courts relied on in finding the two guilty obliged them to disclose the material, and it called the appeal court’s reasoning “assertive and one-sided.” The conviction was quashed on the ground of il fatto non sussiste. That is the strongest formula available, and it generally carries the greatest preclusive effect in any later civil or disciplinary proceedings.

The case has done great harm not only to De Pasquale and Spadaro but to the reputation of the Italian judiciary. Will those in power now act to repair the damage, both to the two men and to the system itself?

The decision (in Italian) is here; an English translation by DeepL Pro is here.

Building Political Will to Fight Corruption: American Political Pros Advice to Democratic Candidates

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A September 29 memo by The Senate Majority PAC, a group of long-time American political consultants, shows how Democratic candidates for the House and Senate can connect with voters’ disgust over corruption. While keyed to the U.S. mid-term elections, the advice should be taken to heart by those everywhere seeking to mobilize citizens or voters to fight corruption.

The memo’s most important point: Tie corruption to an immediate, current concern. Yes, corruption is inherently bad, and everyone should be against it. But what will move far more people than a simple message decrying corruption is one that links it to a current ill. In the United States, that is the growing increase in the costs of food, fuel, and other daily living expenses; hence, the memo suggests several ways candidates can amplify an anticorruption message by showing ways it jacks up prices.

A second important point, also likely effective in many settings, is to make the fight against corruption a nonpartisan issue. Explain that corruption is systemic issues and commit to take on corruption wherever it is found. An above payback politics message can be especially appealing when so many candidates’ prime reason for seeking office is to wage lawfare on their erstwhile opponents.

The corruption literature often treats the political will to fight corruption as exogenous, a fancy way of saying it originates outside the body politic.  To be sure, there are a few cases where outsiders have been critical (Guatemala when CICIG had international support, Ukraine today) but by and large the fight against corruption must be home grown (endogenous to use another ten-cent word).  The Senate Majority PAC’s memo suggests some ways it can.

Full text below.

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Stopping Presidential Family Members Use of the Presidency for Private Gain: Important First Step

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Reports Donald Trump Jr. is personally profiting from his connection to his father prompted U.S. Senator John Curtis to ask the Senate Judiciary Committee to develop reforms necessary to curb such conduct (here).

GAB has queried readers for ideas to help the Committee, and an alert GABer flagged a provision in legislation the House Financial Services Committee approved in April (here) modernizing the Defense Production Act.

Current law gives presidents wide-ranging powers to provide financial help to companies critical for national defense. The provision in the reform bill curbs those powers. It would bar any company not only in which the president, vice-president, or a senior defense official has “a significant interest” from receiving assistance but also any company in which a family member has “a significant interest” from receiving assistance as well. Not a complete solution but a first, and important, step. A sign at least some in Congress are willing to act

The Defense Production Act reform bill awaits a vote of the full House. Good chance for House members to go on record on what they think about family members trading on their relatives’ name.

Text of the section follows.

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Republican Senator Seeks Investigation into Whether Donald Trump Jr. is Profiting Off Ties to His Father

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Senator John Curtis, a Republican from Utah, wrote the Senate Judiciary Committee September 21 asking it to investigate whether Donald Trump Jr., eldest child of President Donald Trump, has used his relationship with his father “for private financial benefit.”

In the letter (here), he writes that

For years, serious questions have been raised about members of presidential families using their names and proximity to the President to advance private business interests.

In a nod to fairness and bipartisanship, he asks the Committee to investigate Hunter Biden as well, but the bulk of his letter recounts the ways Don Jr. has used the family name to enrich himself. From the payment of a lavish wedding afterparty by a Russian oligarch, to his promotion of family-backed cryptocurrency ventures, the pursuit of international real estate deals, several reported investments in defense contracting.

“These reports raise legitimate questions about foreign access to members of a sitting president’s family and whether such relationships can create actual or perceived expectations of favorable treatment,” he writes. He then asks the Committee to “establish the facts, determine whether existing ethics, disclosure, or anti-corruption laws apply, and identify reforms necessary to prevent the presidency from becoming a vehicle for private enrichment by those closest to it.”

The letter is remarkable for two reasons. It puts the question of Presidential relatives trading on their link to the single most powerful individual in the modern world on the agenda at a time when it is likely to engage the public (and hence lawmakers), and it was written by a Republican. It’s unlikely the Committee will act before November, but, particularly if the Republicans suffer a major defeat in November, an investigation will surely be at the top of agenda in 2027.

IMF Report on Ukraine Asset Declaration System: Wasting enormous resources on low value tasks, spending little on those that matter

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No, that is not what the new IMF report on Ukrainian’s asset declaration system says. International organizations are never that blunt. 

But reading the careful, thorough assessment of Ukraine’s most important anticorruption program it is clear that is what the authors were thinking given what they found. And what they did say comes awfully close:

  • “The effectiveness of Ukraine’s [Asset Declaration System] is undermined by an overly expansive and highly formalistic framework that overburdens the [National Agency on Corruption Prevention], weakens prioritization, and limits the system’s capacity to support meaningful detection and recovery of illicit assets.”
  • “[Its] expansive scope, which is unmatched by other European nations, strains the NACP by forcing it to manage one of the world’s largest database of public officials’ assets with highly limited resources.”
  • “The conversion of NACP findings into final judicial sanctions remains limited. In 2025, the NACP transmitted 369 reasoned conclusions to law enforcement for criminal prosecution. These resulted in 12 guilty verdicts, a marked improvement from zero verdicts in 2021, but a conversion rate that remains low relative to the volume of referrals and reflects the broader systemic delays in the judicial pipeline for high-level corruption cases.”

More lifestyle audits

Comparing what officials declare they own to their house they live in, the car they drive, the vacations they take, and other properties they own and expenses they incur is the most effective way to spot if they are corrupt (here). The NACP has a unit dedicated to conducting such audits, but as the IMF report found, not only does the Lifestyle Management (LSM) group have a small staff, but the audits do not focus on priority areas such as 

“. . . war-related procurement and expenditure, where the convergence of significant public resources and reduced oversight creates acute corruption vulnerabilities.”  

The recommendation to audit the lifestyle of those involved in procuring military supplies and equipment comes at a critical time. Confidential reviews by the State Audit Service and an internal Ministry of Defense auditing department show war profiteering has reached unconscionable levels. Front-line troops are being supplied with worthless ammunition while military contractors are reaping huge profits (here).

Lifestyle audits are the surest, fastest way to weed out those officials corrupting the military procurement process. NACP staff now conducting routine checks of the accuracy of low-level officials’ declarations should be reassigned to the LSM unit and ordered to scrutinize the lifestyle of every single individual involved in military procurement.

Ukraine’s supporters in the international community have long recognized that an asset declaration program is crucial to curbing corruption and made its establishment a condition of continued financial assistance. The IMF report provides a roadmap for making the program effective. The international community should insist the government follow that map with haste.

Corruption Sanctions: What Do Governments Need to Know?

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GAB welcomes back Guest Blogger Anton Moiseienko, Associate Professor of Law at the Australian National University. Professor Moiseienko specializes in financial crime and economic sanctions, with particular expertise in global anti-money laundering and counter-terrorist financing (AML/CTF) regulation. He is the author of the 2025 volume Doing Business with Criminals considered an indispensable guide to the global AML/CTF system.

How to harness the promise of corruption sanctions while minimizing their unintended consequences is the issue at the heart of a recent report I wrote for the Basel Institute on Governance, a leading Swiss anti-corruption research center, entitled “Corruption Sanctions: What Governments Need to Know.” In this post, I will offer brief reflections based on its analysis.

The Evolution of Corruption Sanctions

It is useful to start by canvassing the history of corruption sanctions. Targeted sanctions are financial and travel restrictions imposed by governments against individuals or companies outside any judicial process. They emerged in the 1990s as a prominent response to various forms of alleged wrongdoing, including terrorist financing, nuclear proliferation and drug trafficking.

Prior to that, sanctions tended to take the form of comprehensive economic measures against entire countries, such as travel embargoes. By contrast, targeted sanctions enable governments to surgically focus on individuals and companies deemed to be involved in a particular form of malfeasance. Some targeted sanctions programs target affiliates of a rogue government – say Russia, North Korea or Iran – whereas others are “thematic” and therefore address a certain type of wrongdoing regardless of where it takes place in the world.

Corruption sanctions are a form of thematic sanctions. Their evolution began in the U.S. in the early 2000s. In 2004, President George W. Bush signed into law Proclamation 7750 that authorized confidential visa sanctions against corrupt foreign officials and their family members. From 2008 onwards, this sanctions program has been augmented by the sanctions provisions under section 7031(c) of the annual Consolidated Appropriations Acts, which provide for public visa bans. Finally, Congress adopted the Magnitsky Act in 2012 and the Global Magnitsky Act in 2016. Both grant the President the authority to impose financial and travel sanctions against those suspected of corruption and human rights abuse.

Other jurisdictions soon followed suit, including Canada, the UK, and Australia – but, curiously enough, not the EU. The EU legislated to introduce a human rights sanctions regime, but it stopped short of enacting a corruption sanctions program, despite the pledge to do so by the European Commission’s president Ursula von der Leyen. While one might be tempted to criticize the EU’s reticence, the real question is: why should governments consider introducing corruption sanctions, and how can they use them effectively?

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