The Biden administration is urging international banks not to help Russia avoid sanctions, warning that companies could lose access to markets in the US and Europe if they support Russian businesses or oligarchy facing financial restrictions as a result of the war in Ukraine.
The advice of a senior Treasury official highlights the US efforts to put pressure on the Russian economy through US financial power and underscores the broader view that the Biden administration is taking advantage of its ability to impose sanctions, such as isolating Russia from the world economy.
In a private meeting with representatives of international banks in New York on Friday, Deputy Treasury Secretary Adewale Adiemo explained the consequences of helping the Russians overcome sanctions. He pointed to the “material support arrangement” which dictates that even if a financial institution is located in a country that does not impose sanctions on Russia, it may still face consequences for violating US or European regulations, including being cut off from that fund. Settings.
“If you provide material support to an authorized individual or authorized organization, we can extend our barriers to you and use our tools to pursue you,” he said. Adiemo said in an interview on Friday. “I want to make it very clear to these companies and to other countries that are not taking sanctions: the United States and our allies and allies are ready to act if they do something that violates our sanctions.”
Biden management has imposed severe restrictions on Russian financial institutions, oligarchs and its central bank. Has collaborated with allies in Europe and Asia to thwart sanctions evasion; Direct warning to foreign banks is part of that effort.
The meeting, hosted by the International Bankers’ Association, was attended by financial institutions from China, Brazil, Ireland, Japan and Canada.
He said US banks were careful to avoid violating US sanctions, but that Russian individuals and businesses would like to set up trusts and use proxies as solutions. Adiemo said. He also pointed to companies that could support permitted oligarchy trying to move their boats to different ports to avoid being captured.
Most jurisdictions comply with the sanctions, but some, such as the United Arab Emirates, continue to provide safe haven for Russian property. The Boats of many Russian oligarchs Parked in Dubai.
“You have seen many Russian boats moving out of ports, extended to countries that do not impose sanctions,” Mr. Adiemo said. “If you are a financial institution and you have a customer business that provides material support for one of these boats, we would like to make it clear to the public that you, that business, may be subject to our material support.”
Referring to the message he sent to foreign banks, he added: “You need to make sure that not only are you looking to get into your financial institutions, but that you are helping the businesses that you support. Also, you do not want them to give material support to Russian oligarchy or Russian businesses.
Banks and financial institutions around the world are struggling to figure out how to adapt to the new wave of sanctions against Russia.
Citigroup, Russia’s largest U.S. bank with about 3,000 employees, is in “active dialogue” to sell off its Russian consumer and business-banking businesses, according to its CEO Jane Fraser. Bloomberg said This month.
Citigroup cut its exposure in Russia to $ 7.9 billion in March, down from $ 9.8 billion at the end of last year. According to a filing. “This disarmament of financial services is a big deal” Said Mrs. Fraser At a conference this month. He said he expects global capital inflows to split as countries create new financial institutions to avoid over-reliance on Western companies.
Foreign banks with US operations may be caught between conflicting demands. In some cases, U.S. sanctions have cut off long-term customers. Opponents of doing so realized how serious the authorities could be in finding violators and imposing large fines.
In 2019, for example, the British Bank Standard Chartered paid $ 1.1 billion To settle cases brought by the Judiciary, the Treasury, the Controller of the State Bank of New York and the Attorney General in connection with transactions made in Cuba, Syria, Iran and Sudan in violation of US sanctions. Two years ago, Deutsche Bank paid $ 630 million after the capture Helps Russian investors sneak in $ 10 billion In Western financial centers. International giants HSBC and BNP Paribas have spent billions over the past 10 years solving sanctions cases.
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