If international banks help Russia evade sanctions, they risk losing access to markets in the United States and Europe, warns the Biden administration.
The senior Treasury official's admonition highlights the U.S. efforts to exert pressure on the Russian economy through American financial power and underscores the broad view that the Biden administration is taking of its ability to enforce sanctions as it looks to isolate Russia from the global economy.
Adewale Adeyemo, the deputy Treasury secretary, spoke to representatives of international banks in New York about the consequences of helping Russians violate sanctions. Even if a financial institution is based in a country that has not imposed sanctions on Russia, the company can still face consequences for violating U.S. or European restrictions.
Mr. Adeyemo said in an interview on Friday that they can use their tools to go after you if you provide material support to a person or entity that is under sanctions.
The central bank of Russia has been placed under restrictions by the Biden administration. The direct warning to foreign banks was part of the effort to crack down on sanctions evasion.
The meeting was hosted by the Institute of International Bankers and included financial institutions from China, Brazil, Ireland, Japan, and Canada.
Mr. Adeyemo said that U.S. banks had been careful to avoid violating American sanctions, but that Russian individuals and businesses were looking to set up trusts and use proxies as workarounds. He pointed to firms that might be helping the oligarchs who are trying to avoid seizure by moving their yachts to different ports.
Some countries have continued to provide safe haven for Russian assets despite complying with the sanctions. Several Russian billionaires have their yachts docked in the United Arab Emirates.
Mr. Adeyemo said that a number of Russian yachts have moved from ports that have extended sanctions to countries that haven't.
He said that he needed to remind businesses that he supports and that he needed to make sure that he was watching flows into his financial institution.
Banks and financial institutions around the world have been grappling with how to remain in compliance with the new sanctions against Russia.
Jane Fraser, Citigroup's chief executive, said the bank was in active dialogue to sell its Russian businesses.
Citigroup reduced its exposure in Russia to $7.9 billion in March, down from $9.8 billion at the end of last year. She said she expected global capital flows to break down as nations develop new financial systems to avoid being dependent on Western firms.
Foreign banks with U.S. operations can find themselves in a bind. In some cases, U.S. sanctions have forced them to cut off longstanding customers. The authorities could be serious about hitting violators with big fines if they tracked them down.
The Justice Department, Treasury, New York's state banking regulators and state prosecutors brought cases against the British bank for violating the U.S. sanctions on Cuba, Syria, Iran and Sudan. Deutsche Bank paid $630 million after it was caught helping Russian investors sneak $10 billion into Western financial centers. The international giants have paid billions to settle sanctions violations cases.
Lananh gave reporting.
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