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This article is part of Liberty Amplified, a series produced in partnership with the Hoover Institution’s Human Security Project and the Hoover Institution Library & Archives, featuring voices that challenge authoritarianism in pursuit of freedom.
In June 2021 Félix Maradiaga, a Nicaraguan democracy advocate and opposition presidential aspirant, was arrested by the Ortega regime, held in solitary confinement, and later sentenced to thirteen years in prison for the alleged crime of “conspiracy to undermine national integrity.” On February 9, 2023, he was released and forcibly sent to the United States, together with 221 other political prisoners. That same day, Nicaraguan authorities declared the released prisoners “traitors to the homeland,” stripped them of their civil and political rights, and approved measures providing for the loss of their Nicaraguan nationality. Human rights organizations and international bodies treated these actions as part of a broader campaign of political repression against the democratic opposition.
After his forced exile, Maradiaga continued to face financial punishment in the United States, as he remained unable to open or maintain even a basic bank account for more than three years. The obstacle was not a criminal conviction in the United States or any judicial finding by a democratic court. It was the continued circulation of Ortega-regime allegations and risk signals, including accusations tied to foreign funding, national-security offenses, and anti-money-laundering and terrorism-support narratives (AML/CFT) wielded by the regime against civil society and opposition figures.
For financial institutions, these allegations created a compliance problem. Maradiaga appeared in due-diligence processes not only as a former political prisoner and exiled dissident, but as a person whom an authoritarian government had accused of serious crimes and stripped of nationality. The result was practical financial exclusion. He was unable to conduct ordinary financial life in the United States, including receiving income and carrying out routine transactions, until intervention by members of the US Congress and the National Endowment for Democracy helped restore limited access.
Maradiaga’s case is an example of transnational financial repression, introduced in our previous article, and illustrates how authoritarian allegations can survive migration into a democratic jurisdiction and continue operating for years to come.
Exploiting vulnerable systems
Transnational financial repression refers to the phenomenon where authoritarian governments undermine the security, financial access, and legal protection of people and organizations in the United States.
Repression is made possible by weaponizing international frameworks created to fight cross-border threats like money laundering, terrorist financing, and cybercrimes. Governments routinely share information, legal requests, and financial intelligence through these frameworks under the assumption that the request is made in good faith. That trust creates a vulnerability: allegations can move through legal, intelligence-sharing, and financial channels without sufficient independent verification of the underlying evidence, the credibility of the requesting authority, or the political context.
Authoritarian governments exploit this vulnerability by presenting politically motivated accusations as legitimate criminal or security concerns. Such allegations can enable foreign governments to obtain sensitive financial and personal information even when no court has established wrongdoing.
Formal interstate cooperation is not the only pathway for transnational financial repression. Authoritarian governments can achieve similar results by launching targeted misinformation campaigns.
In this form of repression, malicious states and their proxies deliberately disseminate false allegations linking individuals or organizations to money laundering or terrorist financing, not necessarily to trigger prosecutions but to contaminate their risk profiles. Once injected into media sources, legal filings, and commercial financial intelligence databases relied upon by banks, these allegations become embedded in customer due-diligence records and automated risk-scoring systems. This occurs even when the misinformation takes place on obscure websites with no credibility.
Since the misinformation campaigns are framed as potential criminal risk, the targets are typically denied access to the underlying data, lack the right to inspect or correct it, and are unable to compel its removal from compliance databases such as World-Check and LexisNexis.
When targeted individuals or organizations try to open or maintain bank accounts, receive donations for nonprofit activities, or conduct ordinary business in democratic jurisdictions, these fabrications reappear across customer due-diligence records, commercial risk databases, and internal compliance systems. The victim is effectively cut off from the economy, even when courts in democratic jurisdictions have explicitly dismissed the allegations.
Lingering damage
The case of Lyudmyla Kozlovska, one of the co-authors of this article, similarly shows how targeted misinformation campaigns can be converted into financial repression.
After the Open Dialogue Foundation documented corruption and sanctions-evasion rights abuses linked to authoritarian and state-connected actors in Kazakhstan, Russia, and Moldova, Kozlovska and her organization became the target of repeated paid media accusations portraying their work as a money-laundering, foreign-influence, and national-security risk.
The purpose of these accusations was not only reputational. Their effect was to insert politically motivated claims into the information channels used by banks, payment providers, donors, counterparties, and commercial due-diligence firms to assess risk. Once those claims appeared in media reports, legal filings, official narratives, and compliance databases, they acquired institutional weight.
For financial institutions, the practical question became less whether the allegations were true and more whether maintaining a relationship with Kozlovska or ODF could create regulatory scrutiny, correspondent-banking concerns, reputational exposure, or supervisory risk.
The financial consequences were concrete. In Belgium, KBC and BNP Paribas Fortis terminated ODF’s banking relationships, while other banks refused to do business with the organization. Kozlovska’s personal accounts were closed, as were accounts belonging to individuals associated with her organization and related entities. Payment providers also restricted or terminated access, limiting ODF’s ability to receive donations, pay suppliers, reimburse staff and volunteers, and sustain cross-border advocacy and humanitarian operations. These restrictions translated into lost donations, lost earning capacity, and disruption to Lyudmyla’s human rights and national security work.
While Kozlovska won numerous defamation cases in European courts, her legal vindication did not restore her financial access or her compliance reputation. Courts can dismiss allegations, but no legal framework exists to compel the corresponding repair. There is no mechanism that obliges banks, payment processors, or screening databases to purge the risk signals an allegation has already deposited, and no process for restoring a business or an individual’s financial standing once it has been degraded.
In both Lyudmyla and Félix’s cases, Bitcoin privacy payment and communication became protection of their rights and their bank of last resort, allowing them not only to survive but to hold accountable the regimes that persecuted them.
A need for corrections
The power of targeted misinformation campaigns is that authoritarian regimes do not need to prove the accusations they make against their targets. They only need to introduce the allegation into the information systems Western institutions use to assess risk.
Once an allegation enters that infrastructure, it can continue producing consequences long after the original accusation has been discredited. At that point, the regime no longer even needs to actively pursue the target.
This reveals a serious weakness in democratic financial systems and the compliance rules of the Financial Action Task Force (FATF). Over the past decades, these FATF systems have developed increasingly sophisticated ways to identify, record, share, and act on potential financial and security risks. But they have developed few comparable mechanisms to correct those records once the underlying information has been shown to be false or politically motivated.
Moreover, there is no evaluation of how these mechanisms affect economic competitiveness, as the same mechanisms used against human rights activists are being used to undermine Western businesses.
This creates a significant asymmetry. For an authoritarian government, producing and disseminating damaging allegations is cheap, scalable, and repeatable. For the target person, organization or country, identifying and correcting those allegations across different banks, databases, jurisdictions, and platforms can take years and may never be complete.
Jorge Jraissati is a Venezuelan economist and the president of the Economic Inclusion Group, an international policy organization focused on protecting people and entities from debanking risks, supporting countries with their economic security, and advancing the reconstruction of the Venezuelan economy.
Lyudmyla Kozlovska is president of the Open Dialogue Foundation and a leading civil society voice on transnational repression and the weaponization of financial and security tools, which she frames as a national security threat to Western states, not only a human rights concern.
Liberty Amplified features the voices of those who defy autocracy in pursuit of freedom. It is produced in partnership with the Hoover Institution’s Human Security Project and the Hoover Institution Library & Archives.