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In private meetings on Friday with representatives of international banks in New York, Adewal Adeemo, Deputy Secretary of the Treasury, outlined the consequences of helping the Russians bypass sanctions. He noted 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 the consequences of violating US or European restrictions, including dropping out of those financial restrictions. systems.

“If you provide material support to a sanctioned individual or sanctioned entity, we can extend our sanctions regime for you and use our tools to prosecute you as well,” Mr. Adeemo said in an interview on Friday. “I want to make this very clear to these institutions that are based and other countries that may not have taken sanctions action: that the United States and our allies and our partners are willing to act if they do things that violate our sanctions.”

The Biden administration has imposed sweeping restrictions on Russia’s financial institutions, oligarchy, and its central bank. coordinated with allies in Europe and Asia to eliminate sanctions evasion; A direct warning to foreign banks was part of that effort.

The meeting was attended by financial institutions from China, Brazil, Ireland, Japan and Canada, and hosted by the Institute of International Bankers.

Mr. Ademo said US banks were keen to avoid violating US sanctions, but that Russian individuals and companies were looking to set up trust funds and use proxies as an alternative. He also indicated companies that might provide support to sanctioned oligarchs trying to move their yachts to different ports to avoid being seized.

Most jurisdictions comply with the sanctions, but some, such as the United Arab Emirates, have continued to provide a safe haven for Russian assets. The Yachts of many Russian oligarchs Docked in Dubai.

“You have seen a number of Russian yachts moving out of the ports, countries that have extended their sanctions to countries that have not,” Mr. Adeemo said. “We want to make it clear to people that if you are a financial institution, and you have a business that is a customer that provides material support to one of these yachts, then you, that business, may be subject to our provision of material support.”

Referring to his letter to foreign banks, he added: “You have to make sure that you are not only making sure that you are monitoring the flows into your financial institution, but that you also need to help by reminding the companies you support that they, too, do not want them to provide material support to Russian oligarchs or Russian companies, too.

Banks and financial institutions around the world are struggling over how to stay in compliance with new waves of sanctions against Russia.

Citigroup, the largest US bank in Russia, with about 3,000 employees there, has been in “active dialogue” to sell its consumer business and to Russian commercial banks, Jane Fraser, its CEO, Tell Bloomberg This month.

Citigroup reduced its exposure in Russia to $7.9 billion in March, down from $9.8 billion at the end of last year, according to deposit. “Arming financial services is a very, very big deal,” Mrs. Fraser said At this month’s conference. She said she expects global capital flows to fragment as countries develop new financial systems to avoid over-reliance on Western companies.

Foreign banks with US operations can find themselves caught between conflicting demands. In some cases, US sanctions have forced them to cut old customers. Those who resisted learned how seriously the authorities took to track violators and impose heavy fines on them.

In 2019, for example, the British Bank Standard Chartered paid $1.1 billion To settle cases brought by the New York Department of Justice, Treasury and State Banking Supervision and prosecutors regarding transactions it made to Cuba, Syria, Iran and Sudan in violation of US sanctions. Two years earlier, Deutsche Bank paid $630 million after being arrested Helping Russian Investors Sneak $10 Billion in western financial centres. International giants HSBC and BNP Paribas have also paid billions of dollars in the past 10 years to settle sanctions violations cases.

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