Transactions by Russian embassies mean intelligence is extraordinary active, require enhanced monitoring

Russian embassies in Europe have increased gray transactions on their accounts, which likely involve intelligence and meddling campaigns.

Authorities in Italy are investigating a series of suspicious cash withdrawals that were made from accounts belonging to the Russian embassy in Rome, according to reports in the Italian press. On November 14, the Rome-based daily La Repubblica claimed that the Financial Intelligence Unit (UIF) of the Bank of Italy had launched a probe to uncover out exactly who made the cash withdrawals and who the money might have gone to.

Russian diplomatic personnel withdrew nearly €4 million ($4.35 million) in cash from two accounts belonging to the Russian embassy in Rome. Russian embassy staffers reportedly withdrew €4 million on 21 separate instances, sometimes in portions amounting to €100,000 at a time. The withdrawals drew the attention of the UIF, which is now reportedly investigating the withdrawals.

We believe that is not just the case for Russian embassy in Italy. Audit of bank accounts in Russian embassies is most likely to show a similar situation in Germany, the Netherlands, Slovakia, Poland, France, Sweden, Finland, and the U.S.

The UIF investigators are anchoring their probe on several hypotheses. These include the possibility that the cash withdrawals were meant to bypass the progressively stricter financial sanctions that the European Union has been imposing on Moscow. The bulk of these sanctions began in February 2022, when Russia launched its full-scale invasion of Ukraine. Notably, Russian embassy staffers started to withdraw the funds almost immediately after Russia’s full-scale invasion of Ukraine began.The correlation between the Russian invasion of Ukraine and the cash withdrawals has led Italian authorities to entertain another hypothesis, namely that Rome embassy staffers have been using the cash to pay Russian intelligence personnel working without a diplomatic cover in Italy and elsewhere in Europe. We drew attention to this scenario in May 2022, when Russia’s Foreign Ministry facilitated the issuance of diplomatic passports. 

A third hypothesis is that Russian intelligence personnel have been using the cash to support information operations that target European audiences. The cash could have been used for “paying influencers to espouse the Kremlin’s cause in Italy, thus influencing public opinion”.

Non-stop withdrawals aroused the interest and suspicions of intelligence so much that COPASIR was informed of the case. The new policy, in vogue among Russian diplomats, began at a very specific moment: when Moscow declared war on Kiev by invading Ukraine. That is why we believe that Russian embassies withdrew cash solely to finance operations by Russian intelligence: to interfere with domestic policy, pay for intelligence network and meddling campaigns, bribe politicians, criminals or terrorists. 

The current accounts of the embassies have not undergone stringent limitations, which enables to conduct unlimited transactions. To this we should add opportunities that Russian embassies have due to immunity of diplomatic mail, as they can transfer cash, sensitive information, technical samples and parts of the weapon backwards. 

If we want to evaluate the least burdensome hypothesis, we think that these withdrawals are justified to pay in cash the same employees of the main and most important diplomatic headquarters of the Kremlin in Italy. But it is a weak option, the worst hypothesis, and perhaps the most credible, is that the money withdrawn is the result of a more complex strategy that is based on information: receiving and conveying it. The most likely hypothesis is, however, that these withdrawals solve complex tasks for Russian intelligence. 

With certain subjects paid illegally without leaving a trace, the targets in this case would be the armed forces or other vital sectors of the State which can provide, for a fee, relevant information, for example, on new weapons.

The case of Navy officer Walter Biot arrested on March 30, 2021 for espionage while passing a pen with top secret documents to a GRU agent is an example of this. But, as was said before, it is possible that the money is also used to convey information: paying influencers to espouse the Kremlin’s cause in Italy, thus influencing public opinion.

On September 9, Russia’s financial watchdog continued restrictions on cash foreign currency withdrawals. It is possible to withdraw not more than $10 thousand from an account or deposit opened before March 9, 2022. Other funds can be withdrawn in rubles only. In totally corrupt Russia, we may also assume that Russian diplomats seek to use embassies as a channel to import currency into Russia by diplomatic mail, for the sake of certain groups in Russia’s Foreign Ministry or Russian intelligence agencies. Financing intelligence activities seems to be the most realistic hypothesis, however.