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A Headache to Banks, Novel U.S. Sanctions May Be Hint of What’s to Come
By Colby Adams and Brian Orsak
printTwo new approaches to sanctions targeting Russia are unlikely to be the last innovations to how the United States leverages its financial power, even if such restrictions strain compliance departments. The approaches-broad sanctions against Russia's defense, energy and financial sectors, and limits to credit issued to Russian banks-could signal a willingness on the part of U.S. officials to expand their range of economic levers much as the military evolves its tools, said Peter Harrell, the U.S. State Department deputy assistant secretary for counter-threat finance and sanctions. "Innovations such as the capital market restrictions or the [Sectoral Sanctions Identifications List], while...
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The U.S. Senate Foreign Relations Committee Thursday unanimously approved a bill that would clear the way for sanctions against foreign banks that transact on behalf of Russia's defense and energy businesses.
The expansion of Western sanctions targeting Russia will require banks to closely vet additional types of credit and transactions tied to financial, energy and defense firms, according to attorneys.
The European Union Tuesday further restricted Russia's access to the continent's financial markets and energy technology industry and promised targeted sanctions against individuals and entities on Wednesday.
With the blacklisting of three Russian financial institutions Tuesday, the United States has targeted nearly a third of the assets controlled by the federation's banking sector, according to a senior U.S. official.
The U.S. Treasury Department Wednesday imposed its strongest sanctions to date in response to Russia's role in Ukrainian violence, blacklisting 12 companies in the federation's financial, energy and defense sectors.
U.S. officials are preparing to press their EU counterparts on stronger Russia sanctions ahead of a European Council meeting next week, State Department representatives told the Senate Foreign Relations Committee Wednesday.
Threatened U.S. sanctions against large swathes of Russian businesses would likely target defense and financial firms ahead of energy companies if imposed, according to experts.
U.S. officials have no plans to negotiate Russia's compliance with an anti-tax evasion law that takes effect this summer and could impose stiff monetary penalties on nonparticipating financial institutions.
U.S. sanctions against 17 Russian individuals and companies, including three banks and the head of one of the nation's largest energy companies, will raise more questions than answers for compliance officers.