US sanctions are aimed at banks financing trade in goods for Russia’s war in Ukraine.
US sanctions against banks financing trade in goods for Russia’s war in Ukraine have made it much more difficult to move money in and out of Russia. According to the Financial Times, a US executive order introduced late last year forced lenders to abandon Russian counterparties and avoid transactions in different currencies.
Moscow’s trade with key partners such as Turkey and China fell in the first quarter of this year after the United States targeted international banks helping Russia acquire critical goods to aid its war effort.
Getting around the restrictions now requires a growing network of intermediaries to evade regulatory scrutiny even when transactions have nothing to do with the Russian military machine, while increasing currency conversion costs and commissions, officials and financiers say.
“It’s getting harder and harder every month. One month it’s dollars, another month it’s euros; for six months you basically can’t do anything. The logical conclusion of all this will be Russia turning into Iran,” said one of senior Russian investors, referring to tough financial sanctions against Tehran.
It is noted that the US decree is directed against banks in countries that have recorded a sharp increase in trade with Russia after the West imposed sanctions against the Russian Federation in connection with the invasion of Ukraine.
According to officials and experts, banks now fear repercussions from the United States, which could trace any transaction in dollars and harm creditors by cutting them out of the dollar financial system.
Russian methods for circumventing sanctions
According to Matis Mäeker, head of the Estonian financial intelligence unit, Russian organizations and their counterparties are adding more and more transactions that separate the buyer and seller. This increases the cost of transactions, but also makes it difficult for law enforcement to detect them in a timely manner, he added.
Russian importers and exporters are also doing more deals in rubles due to difficulties converting the currency into dollars and euros, financiers say. However, the ruble’s limited convertibility is preventing Russian banks and counterparties from making up for lost trade in dollars and other Western currencies, says a senior Russian investor.
“Even the friendliest jurisdictions, like Kyrgyzstan, are vulnerable. And you still won’t be able to withdraw as much there because the capital of these banks is very small,” the investor said.
Sanctions against the Russian Federation
Earlier, the media wrote that the European Commission is ready to publish a proposal to ban the resale of Russian liquefied gas in EU ports. The commission will also ask for restrictions on three future Russian LNG projects. These measures will become part of the 14th package of sanctions from Brussels.
Also, on May 1, the United States announced a new package of sanctions against Russia that affect more than 280 entities. They are directed against the Russian military-industrial complex, programs for the development and production of chemical and biological weapons.
