RUSI Essay: The FATF Needs to Tackle How War is Financed

The Sentry’s essay examines the role of illicit financial flows in sustaining armed conflict and calls on the Financial Action Task Force (FATF) to address conflict financing directly. The author explores how money laundering, sanctions evasion, and illicit gold trading are utilized to fund wars, using examples from Sudan, the Democratic Republic of the Congo, and Ukraine. The essay advocates for a global strategy to identify and disrupt conflict-related financial networks and suggests that financial institutions should improve their risk assessments regarding conflict-affected countries.

The narrative frames the problem as a systemic failure where illicit finance directly perpetuates violent conflict, necessitating an institutional response from global bodies like the FATF. The core tension lies between the operational reality of transnational criminal networks (money laundering, sanctions evasion) and the institutional capacity to enforce financial regulation across sovereign borders. The reference to specific conflicts—Sudan, DRC, Ukraine—serves not just as illustrative examples but as a map demonstrating that conflict financing is not isolated but woven into global economic structures, suggesting that disrupting finance is a necessary intervention against geopolitical violence. The implicit claim is that the mechanism of funding war is opaque and therefore subject to disruption via financial oversight. The challenge for any regulatory body is moving from reactive compliance to proactive network dismantling, which requires overcoming institutional inertia and jurisdictional complexities inherent in tackling these transnational flows. The implication is that true sovereignty over conflict resolution requires financial transparency enforced globally, raising questions about the capacity of international frameworks to mandate action against non-state actors operating within legal and illicit economies. What mechanisms exist for ensuring that the tools developed by bodies like the FATF are effectively deployed to disrupt specific conflict funding streams rather than merely managing general compliance? How can financial risk models adequately account for the fluid, adaptive nature of illicit finance utilized in active conflict zones?