The Biden administration is urging international banks not to help Russia evade sanctions, warning that firms risk losing access to markets in the United States and Europe if they support Russian businesses or oligarchs that are facing financial restrictions as a result of the war in Ukraine.
The admonition by a senior Treasury official highlights 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.
In private meetings on Friday with representatives of international banks in New York, Adewale Adeyemo, the deputy Treasury secretary, laid out the consequences of helping Russians flout sanctions. He pointed to the “material support provision” that dictates that 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, including being cut off from those financial systems.
“If you provide material support to a sanctioned individual or a sanctioned entity, we can extend our sanctions regime to you and use our tools to go after you as well,” Mr. Adeyemo said in an interview on Friday. “I want to make that very clear to these institutions that are domiciled and other countries that may not have taken sanctions actions: that the United States and our allies and partners are prepared to act if they do things that violate our sanctions.”
The Biden administration has placed sweeping restrictions on Russian financial institutions, oligarchs and its central bank. It has coordinated with allies in Europe and Asia to crack down on sanctions evasion; the direct warning to foreign banks was part of that effort.
Financial institutions from China, Brazil, Ireland, Japan and Canada were at the meeting, which was hosted by the Institute of International Bankers.
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 also pointed to firms that might be providing support to sanctioned oligarchs who are trying to move their yachts to different ports to avoid seizure.
Most jurisdictions have been complying with the sanctions, but some, such as the United Arab Emirates, have continued to provide safe haven for Russian assets. The yachts of several Russian oligarchs have been docked in Dubai.
“You’ve seen a number of Russian yachts move from ports, countries that have extended sanctions to countries that haven’t,” Mr. Adeyemo said. “We want to make clear to people that if you’re a financial institution, and you have a business that is a customer that is providing material support to one of these yachts, you, that business, could be subject to our material support provision.”
Referring to his message to foreign banks, he added: “You need to make sure that not only are you making sure that you’re watching flows into your financial institution, but you need to also help by reminding the…