The Biden administration is set to impose sanctions on international financial institutions that support Russia’s military efforts.
An executive order, expected to be issued on Friday, will target banks aiding Russia in acquiring necessary equipment and goods for its ongoing conflict in Ukraine. These institutions will face exclusion from the US financial system.
In an op-ed for the Financial Times, Deputy US Treasury Secretary Wally Adeyemo warned that severe consequences await those involved in financing and facilitating transactions of goods used in the battlefield.
A senior US official revealed that Russia has been actively using its intelligence services to evade sanctions and secure vital components, often employing financial intermediaries, both knowingly and unknowingly, to bypass restrictions.
The US administration plans to collaborate with American and European banks, informing them about the new regulations. These banks will be responsible for ensuring that their correspondent banks comply with the new sanctions to avoid being disconnected from the US financial system.
The administration is focusing on preventing the facilitation of sensitive items such as semiconductors, machine tools, chemical precursors, ball bearings, and optical systems.
The strategy aims to disrupt Russia’s access to essential materials needed for weapon production by targeting the financial system, identified as a potential bottleneck.
While many Western banks have withdrawn from Russia since the war’s onset, others like Austria’s Raiffeisen Bank International, Italy’s UniCredit, and Hungary’s OTP Bank still maintain some operations there.
Raiffeisen Bank, in particular, has seen significant profits from its Russian ventures, with over half of its earnings this year coming from the region.
The US Treasury has previously requested full disclosure of lending activities in Russia from these banks. As Western banks reduce their activities in Russia, other international lenders are reportedly filling the gap.
