US Disrupts Russia's Financial Flows Via Warning To Global Banks Amid Ukraine War

The U.S. has successfully disrupted financial flows between Russia and countries such as Turkey, the United Arab Emirates, and Kazakhstan. This was achieved through a warning to foreign financial institutions of potential sanctions, according to a senior U.S. Treasury official.

What Happened: The U.S. Deputy Treasury Secretary, Wally Adeyemo, revealed that the U.S.’s threat to impose sanctions on foreign financial institutions has had a significant impact on financial transactions between Russia and other countries, Reuters reported.

“In the data that I can see, I’ve seen a significant difference in terms of financial flows that have been transactions…potentially being blocked by institutions,” Adeyemo said. “And I’ve heard about this also from some of the monitors who are in institutions … that they’re taking a more cautious approach with regard to doing any business with Russia, which is exactly what we wanted.”

This warning, issued in December, targeted financial institutions in third countries that were aiding Russia in bypassing Western sanctions imposed due to its invasion of Ukraine.

High-ranking U.S. officials have visited Turkey, the UAE, and other nations to caution that companies engaging with entities under U.S. restrictions risk losing access to G7 markets, according to the report.

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“What we’ve seen in terms of the information that we’re collecting, is it’s putting sand in the gears of the financial network that they were using to get access to goods, and now they’re having to find new ways to do that,” Adeyemo said of the executive order’s effect on Russia.

Why It Matters: The U.S. has been actively imposing sanctions on Russia and its allies. Earlier this month, the U.S. and its allies joined forces to disrupt Russia’s covert oil fleet, which the country was using to evade sanctions. This was part of a broader strategy to limit Russia’s ability to trade its crude oil.

Additionally, the U.S. recently imposed sanctions on over 500 Russian entities, targeting Russia’s military-industrial complex and third-country companies aiding Russia in obtaining desired goods. This move was part of the U.S.’s strategy to hold Russia accountable for the war and the death of opposition leader Alexei Navalny.

Meanwhile, the UK has also been taking a firm stance against Russia, with Prime Minister Rishi Sunak backing a plan to divert billions from frozen Russian assets to aid Ukraine. Sunak also called for a more assertive approach in seizing the assets themselves, describing this move as a fitting tribute to Alexei Navalny.

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U.S. Russia Ukraine Photo by helloRuby on Shutterstock