Deputy Treasury Secretary Wally Adeyemo told Reuters that secondary sanctions against financial institutions that help Russia bypass its own restrictions are effective. The Treasury cites data showing significant declines in financial flows between Russia and Kazakhstan, Turkey, and the United Arab Emirates.
As a result of an executive order signed last December, the US has the authority to sanction non-Russian institutions that facilitate restricted transactions with Moscow, or are involved in the country’s military-industrial complex.
As National Security Advisor Jake Sullivan said about the order, “we are sending a clear message: anyone supporting Russia’s unlawful war effort risks losing access to the U.S. financial system.”
The US dollar accounts for nearly half of global financial transactions, so some at-risk institutions have become more cautious, Adeyemo said.
“From their CEOs on down, they started requesting meetings with us to ask how we could keep dollar access,” he told Reuters, adding that large banks were also involved in the conversation: “For them, even though they do some business with Russia, it pales in comparison to the amount of business they do with the United States or in the dollar.”
Reuters reported last week that Turkish banks tightened compliance with the December order, complicating financial flows between Turkey and Russia for energy supply purchases. As a result of secondary sanctions, three of China’s Big Four state banks have stopped accepting payments from their Russian counterparts.
Including Russia, China, and the United Arab Emirates, the White House targeted 500 individuals and entities with new sanctions on Friday.
As of now, no financial institution has been targeted by the December order.
In spite of the Kremlin’s success in circumventing Western sanctions with the help of bank intermediaries abroad, the regime is paying for this by way of intermediary fees, according to economist Sergei Guriev.
As a result of sanctions imposed on Chinese and Indian firms over their ties to Russia, the European Union will also exert more pressure.
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