Treasury warns foreign banks against helping Russia evade sanctions

Referring to his message to foreign banks, he added: “You need to make sure that not only do you make sure you are monitoring the flows to your financial institution, but you also need to help by reminding the companies you are supporting that they, neither do you want them to provide material support to Russian oligarchs or Russian companies as well.

Banks and financial institutions around the world have wondered how to stay compliant with the waves of new sanctions against Russia.

Citigroup, the largest US bank in Russia, with about 3,000 employees there, was in “active dialogue” to sell its Russian consumer banking and commercial banking business, Jane Fraser, its chief executive, told Bloomberg this month.

Citigroup reduced its exposure to Russia to $7.9 billion in March from $9.8 billion at the end of last year, according to a file. “This militarization of financial services is a very, very big problem,” Mrs. Fraser said at a conference this month. She said she expected global capital flows to fragment as nations developed new financial systems to avoid being overly dependent on Western companies.

Foreign banks with operations in the United States may find themselves caught between conflicting demands. In some cases, US sanctions have forced them to cut off their long-time customers. Those who resisted this learned how serious the authorities could be when it came to tracking down violators and imposing heavy fines.

In 2019, for example, Britain’s Standard Chartered bank paid out $1.1 billion to settle cases brought by the Department of Justice, the Treasury, the New York state banking regulator and prosecutors. Statement regarding transactions it had carried out for Cuba, Syria, Iran and Sudan in violation of US sanctions. Two years earlier, Deutsche Bank paid $630 million after it was caught helping Russian investors pump $10 billion into Western financial centers. International giants HSBC and BNP Paribas have also paid billions over the past 10 years to settle sanctions violations.

Lananh Nguyen contributed report.