As global conflicts flare, G7 unites to combat illicit financing – part 2

When G7 leaders convened in Kananaskis, Alberta on June 14-15, 2025, they were scheduled to deal with the priorities outlined by the current presidency of Canada and identified by Canadian Prime Minister Mark Carney. These were: protecting our communities and the world; building energy security and accelerating the digital transition; and securing the partnerships of the future. 

However, geopolitical events, including Israel’s recent attack on Iran’s nuclear infrastructure, threatened to derail discussions. Could the G7 remain focused on the agreed agenda, or would it be forced to shift attention to the crisis at hand?

In the event, the topics for the two-day summit were wide-ranging. They included the wars in Ukraine and the Middle East; securing critical mineral supply chains; harnessing emerging technologies such as artificial intelligence (AI) and quantum computing; addressing the global drivers of migrating, with a focus on combating human trafficking and migrant smuggling, transnational crime and drug trafficking; and wildfire prevention and response.  

There was a lack of alignment from members on some issues but what emerged from these discussions was a call for the adoption of measures to tackle illicit financing . This demonstrated that — despite ongoing bilateral tensions between members, and significant geopolitical instability — they remain committed to addressing this significant area of concern.    

Besides tackling how illicit financing is used by organised crime and people traffickers (covered in part one), the G7 examined its place in global conflicts and high-risk countries, and discussed possible sanctions.

Conflict zones

G7 leaders examined various countries and regions that are currently dealing with or facing conflict, and signalled that some of their members would unveil new sanctions linked to these conflicts. These include: 

Ukraine: G7 leaders indicated that they would explore “all options to maximise pressure on Russia, including financial sanctions”, with Canada and the UK issuing a new sanctions package against Russia, including measures targeting its sanctions-evading shadow fleet. 

Israel, Palestine and Iran: G7 leaders discussed the evolving situation in the Middle East, particularly the Israel-Palestinian conflict and Israel-Iran crisis, which most recently included a US military strike on Iran nuclear sites. They called for a ceasefire in Gaza and renewed calls for a diplomatic solution to the conflict. Canada, the UK and Australia, New  Zealand and Norway issued sanctions against Israeli government ministers for “inciting violence against Palestinians”. 

All G7 countries have comprehensive sanctions targeting Iran’s nuclear proliferation programme. Additionally, they have sanctions targeting the terrorist activity of Hamas, which carried out the October 3, 2023 attacks on Israel.

China, Taiwan, and North Korea: G7 leaders highlighted activities by China in the East and South China Seas that are having a destabilising effect,and called for peace across the Taiwan Straits. They also expressed concern about North Korea’s ongoing nuclear weapons and ballistic missiles programme, and the cryptocurrency thefts that fund these programmes, carried out by organisations such as North Korea’s hacking army, the Lazarus group. 

Haiti and Africa: G7 leaders made a high-level reference to conflicts in Haiti.

While they did not specifically cite any African countries, there are currently conflicts taking place between armed groups and/or government forces in Burkina Faso, Cameroon, the Central African Republic (CAR), the Democratic Republic of the Congo, Ethiopia, Mali, Mozambique, Nigeria, Senegal, Somalia, South Sudan and Sudan.

Transnational repression on the rise

The G7 also discussed the rise of transnational repression (TNR) — broadly defined as “an aggressive form of foreign interference whereby states or their proxies attempt to intimidate, harass, harm or coerce individuals or communities outside their borders.”

TNR is associated with corruption and crime, including cybercrime, and G7 leaders said they will build on previous commitments made to defend democracy (including surveillance, detention and/or repression or targets) from foreign threats. 

Finally, they discussed “the links between crisis theatres in Ukraine, the Middle East and Indo-Pacific” that firms should be aware of. This is particularly as they build out and/or enhance their understanding of sanctions, counter proliferation financing, arms trafficking, terrorist financing and conflict financing risks into their business-wide risk assessments.  

Recommendations on risk

More generally, firms should review their country risk matrices. This should reflect a recognition that conflict zones offer opportunities for illegal mercenary activity, criminality and corruption to thrive. 

Firms should consider categorising the countries mentioned as exposing them to higher risks from money laundering, arms trafficking, human trafficking, terrorist financing and corruption. In the light of this, they should update policies and processes to ensure they have optimum due diligence measures and enhanced monitoring on customers with direct associations to these countries, and to monitor transactions to/from countries in conflict. 

Firms should also ensure they have a clear policy on China, and how to mitigate any future risks — whether from a money laundering or sanctions perspective. Regarding proliferation financing (the funding of nuclear, chemical or biological weapons), the Financial Action Task Force (FATF) recently issued a report on Complex Proliferation Financing and Sanctions Evasion Schemes flagging North Korea’s increasing financial connectivity and variety of revenue generating channels, such as cyber attacks, income from overseas workers and other illicit activities. 

Firms should ensure that they stay abreast of emerging typologies, including in the TNR space, and explore how to manage these. In addition to ensuring that their sanction risk systems and controls remain up-to-date and that assurance testing is being carried out on an ongoing basis, firms should build sanctions scanning into their horizon planning, to ensure they can identify affected client populations and are able to freeze client assets as soon as sanctions are announced. 

This is the second of a two-part report on the Kananaskis summit examining the G7’s proposals regarding illicit finance and migrant smuggling, organised crime and its “Follow the Money” approach.

Denisse Rudich is director of the G7 and G20 Research Groups (London) and CEO of Rudich  Advisory, working at the intersection of global governance, technology, illicit finance and security. She is an associate fellow at the Royal United Services Institute (RUSI) and has attended numerous G7 and G20 Summits since 2001. 

Julia Kulik is director of research for the G7 and G20 Research Groups, based at Trinity College, University of Toronto. She has written on performance in the G7, G20 and BRICS, particularly on the issues of gender equality, global health and regional security, and has provided strategic advice to G7 and G20 engagement groups.