US to clamp down on financial companies that help Russia buy military supplies

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The Biden administration plans to crack down on banks and financial services companies that are helping Russia evade strict sanctions on access to technology and military equipment helping in its war against Ukraine, according to senior administration officials.

The move, to be announced on Friday, comes after US attempts to curb Russia's access to supplies it needs to build more missiles and other weapons. have been unsuccessful.

The United States and Europe have imposed strict sanctions on Russia during the last two years. But an illicit network of traders and smugglers, working with the help of shadowy financial firms, has been helping Russia gain access to banned products it needs to replenish its military arsenal.

Moscow's intelligence services and the Ministry of Defense have resorted to networks that facilitate Russia's access to materials prohibited by export them to other countries from where they can be shipped to Russia more easily. This has allowed Russia to win access to critical technology that can help their 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 allow these transactions to be obtained and allow smugglers to receive their payments. Senior administration officials described the new powers as a tool that would allow the United States to throw sand in the wheels of Russia's military-industrial complex.

Western financial institutions have largely stopped doing business with Russia. But administration officials said they hoped the threat of new sanctions would encourage American and European financial firms to put pressure on banks in other countries to stay away from Russian smuggling schemes.

US and European officials have already been working with banks to develop an alert system to alert governments about potential sanctions violations. As of September, US banks had alerted the US government about 400 suspicious transactions.

The Biden administration has relied heavily on the private sector to control its sanctions program.

This week it announced that it would require marine insurers and financial services companies to enforce price caps more strictly that the Group of 7 has imposed on Russian oil exports by collecting additional documentation on the contents and prices of oil shipments.

As part of that strengthened policy, other participants in the energy trading supply chain will have to be willing to provide more information about ancillary costs, such as shipping rates, that traders have been inflating to disguise the higher prices they are paid for Russian products. oil.



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