Threat of sanctions against banks slows down flow of money into Russia

The United States' warning of sanctions against financial institutions has significantly affected cash flows between Russia and countries such as Türkiye, the United Arab Emirates and Kazakhstan.

Source: Wally Adeyemo, US Deputy Treasury Secretary, in an interview with Reuters; European Pravda

Details: According to Wally Adeyemo, the data available to the agency, in particular financial reports, indicate a decrease in the movement of funds after Washington in December issued an executive order threatening sanctions to financial institutions in third countries that help Russia circumvent Western sanctions imposed due to the invasion of Ukraine.

"And I've heard about this also from some of the monitors who are in institutions ... that they're taking a more cautious approach with regard to doing any business with Russia, which is exactly what we wanted" Adeyemo said.

He pointed out that bank compliance departments took the executive order seriously, as it was the first time Washington had said it would apply secondary sanctions.

"Soon after, from their CEOs on down, they started requesting meetings with us to say 'what can we do to make sure that we keep access to the dollar’, "Adeyemo said.

A finance ministry official added that these large banks knew they were in the spotlight and wanted to make sure "they're on the right side."

"Because ultimately for them, even though they may do some business with Russia, it pales in comparison to the amount of business they do with the United States or the business they do in the dollar," Adeyemo said.

Washington has refrained from using the new decree to impose sanctions against foreign financial institutions.

Last week, Reuters, citing sources, said the US threat to impose sanctions on financial firms doing business with Russia had cooled Turkish-Russian trade, disrupting or slowing some payments for imported oil and Turkish exports.

Earlier, the Finnish manufacturer of spare parts for heavy trucks, HD-Parts, which was included in the sanctions list of the United States last week, announced the complete termination of trade with Russia.

Background:

• 26 companies and individuals from 11 countries were sanctioned by the United States on 23 February, in particular China and Serbia, which helped Russia circumvent sanctions by importing critical technologies and equipment for the military-industrial sector.

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