The Biden administration plans to crack down on banks and financial services companies that help Russia evade tough sanctions over access to technology and military equipment that aids its war against Ukraine, senior officials say of administration.
The move, to be announced Friday, comes after U.S. attempts to restrict Russia’s access to supplies it needs to build more missiles and other weapons proved unsuccessful.
The United States and Europe have imposed strict sanctions on Russia over the past two years. But an illicit network of traders and smugglers, working with the help of shadowy financial firms, is helping Russia access the banned goods it needs to replenish its military arsenal.
Moscow’s intelligence services and the Defense Ministry have turned to networks that facilitate Russia’s access to banned materials by exporting them to other countries from where they can be transported more easily to Russia. This gave Russia access to critical technologies that could help its military.
Finding new ways to limit Russia’s ability to replenish its military supplies is increasingly important as Western aid to Ukraine dries up.
On Friday, President Biden will sign an executive order giving the Treasury Department the authority to impose sanctions on banks and other financial institutions that authorize these transactions and allow smugglers to get paid. Senior administration officials described the new powers as a tool that would allow the United States to throw sand into the gears of Russia’s military-industrial complex.
Western financial institutions have mostly stopped doing business with Russia. But administration officials said they expected the threat of new sanctions would encourage U.S. and European financial firms to pressure banks in other countries to stay away Russian smuggling projects.
U.S. and European officials have already worked with banks to develop an alert system to warn governments of possible sanctions violations. As early as September, American banks had alerted the American government to 400 suspicious transactions.
The Biden administration relies heavily on the private sector to control its sanctions program.
This week, he announced that he would require shipping insurers and financial services companies to more rigorously enforce the price cap that the Group of Seven countries imposed on Russian oil exports by collecting additional documents on the content and prices for oil shipments.
As part of this strengthened policy, other players in the energy trading supply chain will need to be prepared to provide more information on soft costs, such as shipping fees, that traders have inflated to hide the higher prices paid for Russian oil. oil.
