Financial Exclusion and State-Backed Cybercrime

• In Event: Digital Trade, Money, and Cybersecurity

Abstract

In recent years, the digital transformation of the global economy and the widespread adoption of cryptocurrency have allowed crime to become internationalized in new ways. In addition to private criminal actors, some states have adopted cybercrime as a covert geopolitical tool to undermine adversaries or fund national initiatives. What motivates some states to engage in cybercrime despite the costs? Notably, all major countries that engage in cybercrime today also face exclusion from the international financial system, either through sanctions or other restrictions. However, it is unclear in which direction the causal arrow flows. Does financial exclusion makes states more likely to engage in cybercrime, or are states that engage in cybercrime more likely to face financial exclusion as a result? I contextualize the analysis using theories of participation in crime and rebellion at the individual level, which informs testable hypotheses about the circumstances leading states to engage in cybercrime. This paper provides insight into the causes of an important and growing international security threat — that of cybercrime carried out by state-affiliated actors and directed against a state’s chief adversaries.

Author

• Karen Nershi, Middlebury Institute of International Studies