US President Joe Biden signed a decree tightening sanctions against financial institutions collaborating with the Russian military-industrial complex.
“Today’s actions underscore the need for financial institutions around the world to ensure that they do not facilitate activities that support Russia’s military efforts and to implement due diligence practices that protect them from being exploited by Russian procurement networks,” the State Department said in a statement.
The decree provides for tougher sanctions against financial institutions that in any way participated in transactions in favor of or on behalf of individuals and legal entities previously included in US sanctions lists for participation in the work of the Russian military-industrial complex.
Also, new measures are designed to complicate the import of certain goods of Russian origin into the United States. In particular, we are talking about restrictions on the import of diamonds mined, processed or produced in Russia, as well as on the import of seafood caught in Russian waters or by vessels flying the flag of the Russian Federation.
Senior administration officials said the new order would send a message to financial institutions that they must either stop allowing their companies to supply components and goods to the Russian defense sector or face significant sanctions.
The United States and its allies, including the European Union and Britain, imposed sanctions on Russia after its invasion of Ukraine in February 2022 and continue to increase pressure on Moscow, targeting the financial sector, dozens of oligarchs and Russian President Vladimir Putin.
The decree will be agreed upon with the allies.
The United States has repeatedly warned companies against evading US sanctions imposed on Russia. The warnings targeted firms in the United Arab Emirates, Turkey and other countries that were accused of helping Moscow circumvent the measures.
Senior U.S. officials also visited Turkey, the United Arab Emirates and other countries to warn that businesses could lose access to G7 markets if they do business with entities subject to U.S. restrictions.
Pain point
One senior official said Washington’s initial sanctions and export controls had had a significant impact, with the Russian economy falling short of pre-war forecasts and the ruble stuck at a base interest rate of 16%.
The new order will give the U.S. Treasury Department and its related agencies new tools to combat logistics networks that Moscow has tried to create to evade sanctions through the use of front companies and “interested and unintentionally exploited financial intermediaries,” the official said, speaking on condition of anonymity.
“We have imposed sanctions on a number of companies that we have identified, but ultimately the bottleneck for these companies and Russia’s ability to continue to try to circumvent our sanctions is the financial system,” one senior official said.
“This tool allows us to target these institutions and present them with very tough choices,” he added.
The provisions come into force immediately after the decree is signed.
The administration said it is not aware of any U.S. or European institutions that are violating the order at this time, noting that most U.S. and European firms have already curtailed their business with Russia.
The order would also give Washington the ability to ban products made in Russia but “substantially transformed” outside the country, including diamonds, according to another senior White House official.
The move comes after the G7 countries earlier this month announced an outright ban on Russian diamonds starting January 1, followed by gradual restrictions on indirect imports of Russian gems from around March 1.
The United States has already banned direct imports of non-industrial Russian diamonds, “but the new measure will expand the ban to include Russian-origin diamonds processed in other countries,” the official explained.
