UK Election Security is Threatened by Political Money Laundering via Cryptocurrency

In the coming months the UK is expected to pass a new elections bill that will rebuild the country’s ‘firewall against foreign interference’. One of the threats it will supposedly address stems from the use of cryptocurrency. That is a worthwhile aim, but Government suggestions that this threat will be confronted simply by treating crypto donations in the same manner as fiat currency indicate that the bill may both misunderstand and underestimate the nature and scale of the cryptocurrency threat. Unless the version that reaches Parliament is reinforced, the firewall may end up resembling a sieve. Failing to take the opportunity to address these shortcomings now would represent a serious missed opportunity.

The Kremlin Threat

The gravest electoral interference threat – although by no means the only one – is Russia. Evidently the Kremlin regards crypto as an important tool of statecraft, as seen from the development of the A7A5 stablecoin for sanctions circumvention, acquisition of dual use items via cryptocurrency payment and shielding banks from secondary sanctions. Cryptocurrency is also used in funding sabotage operations across Europe, and Kremlin-linked figures are engaged in bitcoin mining in shadow territories including Abkhazia and the occupied Donbas, creating freshly-minted tokens with no history to trace.

At the same time, the Kremlin has a track record of providing financial and practical support to political forces that it considers helpful. In 2014 the French Rassemblement National received a €9.4m loan from the First Czech Russian Bank that was structured in an unusual way. Both Romania and Moldova have seen large-scale Russian funding of political campaigns using various illicit means. In 2022, as reported by the New York Times the US State Department issued a report identifying $300m in covert Russian political funding aimed at democracies.

Both Europe’s support for Ukraine and its own efforts to re-build its military industry and forces are seen as a threat in Moscow that can be splintered by creating political and social turbulence that turns European states toward pro-Russian populism. In terms of return on investment, this is a highly efficient means of neutralising adversaries, forming part of the continuum of hybrid warfare, along with information operations, sabotage and cyber warfare.

To be clear, disruptive political forces of the left and the right are legitimate, and the popular dissatisfaction that drives their electoral appeal is real. What is at stake here is simply that no party – populist, establishment, right or left – should receive illicit foreign financing. The principle should therefore be uncontroversial: democracies must defend the integrity of their political systems and if that integrity is threatened by a technological development such as cryptocurrency, then electoral law – and its enforcement – needs to be updated to counter it.

A Technology that Supercharges Political Money Laundering

To understand the threat properly – and to have a hope of countering it – illicit donations should be treated as a form of money laundering, as implied in the 2022 State Department report. In traditional laundering a ‘predicate crime’ such as narcotics trafficking taints the funds, which then have to be cleaned. In ‘political money laundering’, it is the connection to the hostile state that must be washed away. For example, a donor might receive £2m in Bitcoin or Tether, keep £1m as a fee and donate the remaining £1m. Put simply, a permitted donor is being bribed to donate.

This is why focusing on donations merely made in crypto misses the point: money washed in this way will be donated as fiat currency. But if a donor is a British taxpayer, their tax affairs ought to be sufficiently transparent to deter this behaviour, or to make it practical to investigate should suspicions arise. However complicated a British taxpayer’s finances might be, they still have to file an annual tax return to His Majesty’s Revenue & Customs (HMRC, the tax authority). This, in turn, should be available to the Electoral Commission should an investigation be needed. In reality, HMRC is often reluctant to assist the police and other law enforcement bodies on grounds of data protection or ‘the privacy of clients’, and so this co-operation between the two organisations should be put on a statutory footing.

Such an investigation is all but impossible when the donor is resident outside the UK and their income is not under the aegis of HMRC. In theory the intelligence services would be able to help in an investigation. In practice, however, this does not work. The intelligence services traditionally regard electoral politics as a minefield to be avoided, as the enduring paranoia over the Wilson government illustrates. It is time to move beyond this concern and combine the input of the intelligence services with a fully staffed and capable Electoral Commission alongside other regular government institutions.

Donations Made in Crypto

Crypto donations in the UK are in their infancy. The only parliamentary party to have opened a crypto wallet for donations is Reform. In October 2025 it was reported that the first ever major crypto donation in British politics had been made, and that Reform was the likely recipient. Reform has chosen a Polish payments processor named Radom. While the company has a UK-registered entity, its Virtual Asset Service Provider (VASP) registration is in Poland and its Polish entity is the sole provider of cryptocurrency services. This latter point raises questions as it would complicate UK access to data, if needed. Moreover, Poland has some of the weakest crypto Anti-Money Laundering (AML) regulation in Europe. As an example, crypto Automated Teller Machines (ATMs) are effectively banned in the UK, because they facilitate the anonymous conversion of cash into cryptocurrency. In Poland, however, there are around 300 such machines.

The Offshore Veil

This issue of non-resident donors is not theoretical. As reported by the Financial Times, during 2025 Reform returned just under £200,000 to 18 donors, indicating the extent to which Reform has actively courted non-resident donors, underlined in April 2025 when Nick Candy told the Financial Times that the party was embarking on a fundraising drive targeting ‘offshore’ donors. As Candy rightly states, UK companies that are actively trading are eligible donors, regardless of ownership. This is an oversize loophole that the Cameron government promised to address, but did not (and indeed exacerbated).

Policy Recommendations

With all this in mind, the government should take the opportunity to consider incorporating the following defences in the forthcoming bill:

1. Recognise that cryptocurrency is above all a money laundering tool that facilitates illicit fiat currency donations and thus acknowledge that that the rules governing donations made in cryptocurrency are far from sufficient.
2. Create a statutory basis for HMRC to share data on a case-by-case basis with the Electoral Commission.
3. Ensure that all individual donors are UK taxpayers. This measure would probably strike voters as fair and reasonable; if a donor is paying no tax in Monaco or Dubai, why should they be able to make political donations? Or, put differently, ‘No (financial) representation without taxation.’
4. Close the longstanding loophole that allows an active UK company – regardless of ownership – to donate to political campaigns.
5. Ensure that only UK-registered VASPs can be used to handle donations made directly in cryptocurrency, so that there is a clear and consistent application of AML regulations.
6. As a final line of defence, the donor should shoulder the burden of proof in terms of origin of funds. If opaque crypto transactions or complex offshore networks feature in a donor’s affairs, then the Electoral Commission (with HMRC’s assistance) should be able to request further disclosure. If no certainty can be reached, then the donation can be blocked.

More Rigour Needed

In sum, the approach to political donations in the UK remains naïve and those ostensibly empowered to police the system are underpowered. Longstanding loopholes that present vulnerabilities to UK electoral integrity remain, and the growth of cryptocurrency and allied technology such as AI threaten to accelerate the ability of malign actors to abuse these vulnerabilities. And even if the existing system were fully implemented, these digital developments present new vulnerabilities that would challenge status quo regulation.

By contrast, the six measures set out in this article would also address other present threats that do not necessarily involve cryptocurrency; Russia is the primary threat, but by no means the only threat. China and several states in the middle east have both the means and the intent, as do private foreign interests with strong ideological ambitions.

In conclusion, these recommendations would create a proportionate and fair set of interlocking defences against foreign influence in the funding of British politics. In particular, they address a conceptual error concerning cryptocurrency – the idea that the threat emanates from donations delivered in Bitcoin or stablecoins. Instead, the legislation should recognise that cryptocurrency is a great leap in money laundering technology and defend against it accordingly. Without such defences, the UK’s political system presents an open goal to foreign enemies.

© Neil Barnett, 2025, published by RUSI with permission of the authors.

The views expressed in this Commentary are the authors', and do not represent those of RUSI or any other institution.

For terms of use, see Website Terms and Conditions of Use.

Have an idea for a Commentary you'd like to write for us? Send a short pitch to commentaries@rusi.org and we'll get back to you if it fits into our research interests. View full guidelines for contributors.