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This report contains corrections.

At the turn of the 18th century, a newly elected president of the United States—only the second in the nation’s then-brief history—cautioned the American people about “the danger to our liberties if anything partial or extraneous should infect the purity of our free, fair, virtuous, and independent elections.” In particular, John Adams pointed to threats from abroad, warning that if a changed election outcome “can be obtained by foreign nations by flattery or menaces, by fraud or violence, by terror, intrigue, or venality, the Government may not be the choice of the American people, but of foreign nations. It may be foreign nations who govern us, and not we, the people, who govern ourselves.” Speaking before a joint session of Congress, he thus pleaded with the U.S. Senate and the House of Representatives to “[preserve] our Constitution from its natural enemies,” including “the profligacy of corruption, and the pestilence of foreign influence, which is the angel of destruction to elective governments.”¹

The threat of foreign influence over our elections did not wane in the intervening 220 years: Today, the United States has a president whose election was aided by the fraud and intrigue of a foreign nation. Americans who watched how President Donald Trump, in the words of the late Sen. John McCain, “abased himself … abjectly before a tyrant” in Helsinki, cannot be faulted for wondering whether John Adams’s long-ago warning has become a reality.²

Trump’s campaign to win the presidency required money, as did the Kremlin’s campaign to help him. While these two campaigns aligned in their goal—Trump’s victory³—overt monetary contributions from Russia would have drawn regulatory scrutiny, not to mention public ire. Any financial support from abroad, therefore, would have had to be creatively obscured.

U.S. law bans foreign nationals from donating to political campaigns, but they can circumvent the restrictions by routing financial support through anonymous bank accounts, shell corporations, front companies, and other opaque transaction vehicles. Such maneuvering does not require a brilliant financial mind or a suite of high-tech instruments: In many places, including the United States, it is easy to set up a company without disclosing its purpose or the identity of its true owners. Foreign adversaries can then use these companies to execute anonymous financial transactions that facilitate attacks on free and fair democratic elections. For example, a network of shell corporations could be used to hide the origin of foreign funds pumped into a political action committee (PAC) or a social media political ad campaign. The Kremlin has long had expertise in this area. During the Soviet Union’s heyday, the KGB perfected the craft of anonymously moving funds to seed foreign political campaigns.⁴ The FSB and the GRU, the agency’s heirs, are well-versed in these techniques as well.⁵

Law enforcement, congressional, and media investigations over the last two years have revealed that Kremlin-linked actors paid considerable sums of money to support Trump and curry his favor. A Russian organization allegedly controlled by an oligarch close to Putin spent more than $1 million a month just on social media campaigns favoring Trump, according to the special counsel.⁶ A Russian American energy tycoon—who boasted to a Kremlin official in July 2016 of being “actively involved in Trump’s election campaign”—donated hundreds of thousands of dollars to the Trump Victory fund.⁷ And a company affiliated with a sanctioned Russian oligarch paid $1 million to Michael Cohen, then Trump’s personal lawyer, for unspecified services after the election.⁸ These and other transactions examined throughout the report establish that, during the campaign and presidential transition, Trump had several compromising financial entanglements with actors representing a hostile foreign power.

Moreover, while Trump vehemently denied business links to Russia during his campaign, the Kremlin knew otherwise.⁹ Recent filings by the special counsel allege that Trump hoped to make “hundreds of millions of dollars from Russian sources” for a project in Moscow that was advancing “at a time of sustained efforts by the Russian government to interfere with the U.S. presidential election.”¹⁰ In his plea agreement, Cohen admits to suggesting that Trump could travel to Russia “once he becomes the nominee after the convention” to drum up support for the project.¹¹

Trump’s prospect of a lucrative deal in Moscow, one that ostensibly hinged on support from the Kremlin, may help explain his peculiar pro-Russia foreign policy platform during the campaign.¹² But this may be just part of the picture. The channels forged through business dealings, including the establishment of direct relationships with Russian government officials, could have been instrumental to providing any material support to Trump’s campaign.

While the Trump campaign receiving direct funds from Russia would have been illegal, recent revelations suggest that Trump has little regard for federal election law. In August 2018, Cohen pleaded guilty to violating campaign finance laws through the act of paying women who claimed relationships with Trump in order to buy their silence before the election¹³—which the U.S. Department of Justice (DOJ) alleges was at Trump’s direction.¹⁴

What is known of Russia’s use of financial resources to help elect President Trump—and his own willingness to violate campaign finance laws—raises serious questions about many still-unexplained transactions executed during the campaign and the postelection transition period. For example, consider Russian oligarch Aras Agalarov’s transfer of $20 million to an American bank account just days after a meeting that he organized between the Trump campaign’s most senior officials, including Paul Manafort and Jared Kushner, and a Russian government attorney.¹⁵ Although this may have been a legitimate business transaction that raised flags simply by virtue of whom it involved, its timing and the use of previously inactive shell companies show that it—and several other transactions described below—warrant further investigation by Congress, state-level investigators, and the press.

The lessons of the 2016 election have still not been fully learned. The special counsel probe will show us much of what happened, as will investigations that are sure to be pursued next year by newly empowered Democrats in the House of Representatives. But unless Congress also enacts significant legislative reforms to address faults in the U.S. financial system and campaign finance laws, our elections—and, by extension, our Constitution—will remain vulnerable to the “profligacy of corruption” and “pestilence of foreign influence” that President Adams warned our nation of more than two centuries ago.

Hackers, troll farms, and spies cannot operate without money. It is an obvious point to make, but an important one; it helps investigators follow the money trail, discover who is funding these entities, and understand how such attacks on U.S. elections and democracy can be prevented from happening again.

Money used to perpetuate a crime is illicit, or dirty, and must be cleaned, so to speak, before it can be used to rent computer servers in the United States, pay for a targeted ad campaign on Facebook, or court a government official, to name a few examples.

Whatever the immediate objective of money laundering, the tactics are typically the same, employing some combination of shell corporations, front companies, nominees, and offshore bank accounts. Successful launderers thereby insert large amounts of money into the U.S. financial system, from where it can be easily deployed in a variety of ways. After 9/11, Congress recognized that money laundering could facilitate acts of terror and attempted to close some loopholes in the financial system with the passage of the Patriot Act.¹⁹ Today, money laundering’s role in facilitating foreign political interference must be similarly recognized and addressed.

This section analyzes the role money laundering could play in financing hacking, illicit social media propaganda, and other foreign influence campaigns.

Money laundering, hacking, and disinformation

To date, the most concrete evidence of Russia’s expenditures on the 2016 presidential election comes from the special counsel’s criminal indictments of the GRU, Russia’s military intelligence agency,²⁰ as well as of hackers and the Internet Research Agency (IRA) troll farm.²¹ It should be noted that President Trump has denied any collusion with Russia during the 2016 presidential campaign. A close study of these charges, which include money laundering, provides insight into how financing of hacking and information warfare operations can be disguised. Furthermore, the analytical framework derived from this exercise can then be applied to other suspicious transactions.

The GRU officers accused of hacking the Democratic Congressional Campaign Committee and the Democratic National Committee (DNC) used cryptocurrency to pay for the necessary computer infrastructure in the United States.²² Mueller’s indictment alleged that the defendants “conspired to launder the equivalent of more than $95,000 through a web of transactions structured to capitalize on the perceived anonymity” of bitcoin, among other cryptocurrencies.²³ The GRU hackers used hundreds of different email accounts to purchase servers to avoid creating a “centralized paper trail.”²⁴ They also enlisted several third parties that “facilitated layered transactions through digital currency exchange platforms[,] providing heightened anonymity.”²⁵ The extensive laundering of the funds was intended not only to further a crime, but also to obscure the origin of the funds, providing the operation a degree of plausible deniability.

In another operation, Californian Richard Pinedo sold stolen identities online to the IRA, unwittingly helping the organization disguise the sources of its funds when purchasing social media ads.²⁶ The ads’ content and purpose—to sow discord among the American electorate—have been thoroughly analyzed, with one academic study contending that they altered the outcome of the 2016 election.²⁷ The financial acrobatics that helped fuel this successful campaign, however, have not received the public scrutiny they deserve.

In February 2018, Pinedo pleaded guilty to identity fraud for selling bank account numbers registered using the stolen identities of U.S. people, a crime that ultimately abetted the IRA in concealing the origin of its operatives and money.²⁸ The IRA’s agents purchased these accounts to circumvent disclosure requirements for online transactions, including the purchasing of social media ads.²⁹ This identity veiling could be one of the reasons Facebook was forced to revise its estimate³⁰ of the scope of the IRA’s operation: The early estimated numbers of compromised ads were tethered to transactions executed in rubles or those directly linked to the IRA³¹ and missed those concealed by either the stolen identities or other corporate entities within the IRA’s ecosystem.³²

The IRA indictment alleged that the defendants conspired against the United States by violating campaign finance laws, which ban “foreign nationals from making certain expenditures or financial disbursements for the purpose of influencing federal elections.”³³ This charge is significant, because it demonstrates that financial support for a campaign does not necessitate direct transfer of money to that campaign. The IRA’s monthly budget of $1.25 million³⁴ fueling Project Lakhta, its pro-Trump ad campaign, in the months leading up to the 2016 election provided important assistance to then-candidate Trump.

The special counsel also charged the IRA with conspiracy to commit bank fraud to “receive and send money into and out of the United States.”³⁵ The IRA-linked operatives attempted to move beyond social media and organize physical rallies across the United States, using the stolen accounts to pay for political “buttons, flags, and banners.”³⁶ And like the GRU hackers, the IRA trolls needed laundered money to purchase space on U.S.-based computer servers. Several of the defendants also used this money to fund intelligence-gathering junkets to the United States, where they learned to focus their online efforts on “purple states like Colorado, Virginia [and] Florida.”

Money to fuel the operation was not lacking: The IRA indictment alleged that a powerful, Kremlin-favored oligarch named Yevgeniy Prigozhin had been bankrolling the multimillion-dollar operation. Prigozhin has denied any involvement with the IRA.³⁷

Yet, its covert transfer, particularly to the United States, has proven challenging to execute; the money trail left behind ultimately led to evidence implicating the defendants.⁴² Prigozhin’s holding company allegedly distributed funds to the IRA through approximately 14 bank accounts held in the names of separate shell corporations with generic names such as “Standart LLC.”⁴³ Despite such fragmentation, the special counsel’s team was able to identify the overlapping elements and reveal the corporate hydra behind the operation.

Other U.S. government investigators have also followed the money to identify and disrupt continued efforts to weaponize political discourse. In October 2018, weeks before Americans were due to vote in the midterm election, the DOJ unsealed a criminal complaint⁴⁴ against Russian national Elena Khusyaynova, alleging that she managed the finances for the same Prigozhin-sponsored Project Lakhta—all while Prigozhin’s attorneys were contesting the earlier charges in a U.S. court.⁴⁵ As with the 2016 elections, Project Lakhta has aimed “to sow discord in the U.S. political system” through the spread of misinformation on social media platforms.⁴⁶ Between 2016 and 2018, the project’s operating budget exceeded $35 million, according to prosecutors,⁴⁷ though only a portion of that was allocated to the congressional campaigns in the United States. Khusyaynova publicly mocked the indictment, stating “it turns out that a simple Russian woman could help citizens of a superpower elect their president.”⁴⁸

The Steele dossier⁴⁹—an opposition research memo on Trump and his alleged links to Russia—claims that when Michael Cohen reportedly traveled to Prague⁵⁰ in the fall of 2016 to meet with Kremlin officials, the “agenda included how to process deniable cash payments to operatives,” including hackers of the Clinton campaign’s emails.⁵¹ “Various contingencies for covering up these operations” were also to be discussed.⁵² While much of the dossier’s content is still unproven—including Cohen’s trip—the document provides a proof of concept illustrating that funding illegal operations is a challenge for any criminal organization. Investigators who are able to uncover these financial transactions can discover relationships between parties and important clues about the underlying crime.

Ambassador Kislyak and the flagged Russian Embassy transactions

It is not unusual for discussions of foreign political influence operations to pivot to embassies.⁵³ Former Russian Ambassador Sergey Kislyak, in particular, is a key figure in the narrative of alleged collusion between the Russian government and the Trump campaign.⁵⁴ He held a series of secret meetings with Trump campaign officials, including Trump’s son-in-law and adviser Jared Kushner, former U.S. Attorney General Jeff Sessions, former national security adviser Michael Flynn, former Trump campaign foreign policy adviser Carter Page, and former Trump campaign policy adviser J.D. Gordon.⁵⁵ During one private meeting Kislyak held with Kushner and Flynn, they reportedly discussed the possibility of establishing a secure communications channel between the Kremlin and the Trump campaign.⁵⁶ During the transition, Kislyak had also brokered a meeting between Kushner and the head of a sanctioned Russian government bank, Vnesheconombank. The bank maintains the meeting was about Kushner’s family business; Kushner denies this and says the meeting was a diplomatic one related to his role in the presidential transition.⁵⁷

On top of these controversial meetings, Kislyak’s embassy also carried out several suspicious transactions⁵⁸ that U.S. bank investigators have reportedly flagged to U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).⁵⁹

First, in November 2016—10 days after Trump won the presidency—the Russian government wired Kislyak a lump-sum payment of $120,000.⁶⁰ Both the timing and the amount raise questions, as the sum was more than twice Kislyak’s normal salary payments.

Second, the Russian Embassy attempted to make a $150,000 cash withdrawal just a few days after Trump’s inauguration in January 2017. The bank reportedly blocked this transaction, because it questioned the embassy’s justification that it needed cash in Washington to pay employees who had already returned to Russia.⁶¹

Third, the embassy paid $2.4 million to a small construction company controlled by a Russian immigrant in the United States, who was reportedly not equipped to carry out the work commissioned.⁶² What’s more, the bank investigators found that the money was “cashed quickly or wired to other accounts.”⁶³ As Paul Manafort’s trial showed, small vendors can be instrumental, intentionally or not, to laundering large amounts of money from abroad. The construction company the Russian Embassy contracted has not been accused of any wrongdoing to date.⁶⁴

Perhaps in part due to the unprecedented scrutiny brought about by the special counsel investigation, other miscellaneous transactions have been flagged and probed both by the processing U.S. banks and relevant authorities, including payments to the Russian Cultural Centre in Washington, D.C.,⁶⁵ and a $30,000 wire from the Russian Foreign Ministry marked “to finance election campaign of 2016.”⁶⁶ The Russian government asserts that the latter payment was to help Russian citizens in the United States vote from abroad in Russian elections, which also occurred in 2016.

Bank auditors flagged the above transactions for obvious reasons, yet investigators must patiently probe less patently suspicious transactions that no doubt exist, as dirty money is best hidden in a sea of legitimate transactions. Consider another allegation made in the Steele dossier: The Russian Embassy had funneled money under the cover of pension disbursements made to emigrants in the United States as a possible means of hiding payments to “relevant assets based in the US,” including “cyber operators.”⁶⁷ Though not corroborated, this alleged scheme helps in understanding how traditional money laundering mechanisms, including layering of transactions, can potentially be appropriated for cross-border interference.

Maria Butina, a bridge between Russia and America’s conservatives

Maria Butina, the alleged Russian agent who sought to infiltrate conservative political circles in the United States, could serve as a textbook example of how financial maneuvering on both sides of the Atlantic can facilitate an influence campaign.⁶⁸ In March 2015, Butina drafted a proposal for her “diplomatic” work targeting the National Rifle Association (NRA) and the Republican Party in anticipation of the 2016 presidential election.⁶⁹ She reportedly submitted the proposal to Alexander Torshin of the Central Bank of Russia.⁷⁰ She requested a budget of $125,000 to participate in “all upcoming major conferences,” at a time when she was still traveling back and forth between Russia and the United States. Paul Erickson, who brokered Butina’s introductions to conservative leaders, and with whom Butina was later revealed to have a romantic relationship, was in dire financial straits.⁷¹ Any money to defray her costs would have had to come from Russia.

Since Butina’s arrest, several potential sources of her funds have been revealed. For instance, she reportedly enjoyed patronage from a Russian oligarch, Konstantin Nikolaev, who has financial interests in the United States and in Russia’s gun industry.^{https://www.americanprogress.org/issues/democracy/reports/2018/12/17/464235/following-the-money/}