U.S. President Joe Biden on December 22 signed an executive order paving the way for Washington to impose sanctions on financial institutions that help Russia evade sanctions imposed over its war in Ukraine.
The new executive order makes clear that banks and other financial institutions face significant sanctions themselves if they don’t stop the transactions of people and entities that have been designated for sanctions, in particular those involved in shipping of components and goods to the Russian defense sector, the White House said.
"We are sending an unmistakable message: Anyone supporting Russia’s unlawful war effort is at risk of losing access to the U.S. financial system," national-security adviser Jake Sullivan said in a statement.
U.S. Secretary of State Antony Blinken said in a statement that the order expands the United States’ ability to target financial institutions located outside of Russia that facilitate transactions on behalf of the Russian defense sector.
“The new order also gives the United States the authority to ban importation to the United States of certain goods mined, produced, or harvested in Russia, even if substantially transformed in a third country,” Blinken said.
The order underscores the need for financial institutions around the world to “ensure they are not facilitating activities that support Russia’s war effort and implement due diligence practices that protect them from being exploited by Russia’s procurement networks,” he said.
The executive order is part of a broader U.S. crackdown on sanctions evasion.
The U.S. Treasury Department in recent months imposed sanctions on individuals and entities in the United Arab Emirates, Turkey, Hong Kong, and China that it accused of helping Moscow evade sanctions.
A senior U.S. official who spoke about the order in a conference call on December 21 said companies and individuals that have been found to participate in evading the sanctions have been designated for sanctions, but the “choke point” for these companies and Russia’s ability to circumvent sanctions is the financial system.
"What this tool allows us to do is to target those institutions and give them a very stark choice," said the official, who spoke on the condition of anonymity.