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U.S. banks and other institutions can avoid running afoul of the price cap on Russian crude oil set to take effect on Dec. 5, even if they lack direct information on the price of shipments they finance or insure, federal officials told bankers in an online discussion Monday.

On Sept. 7, the Group of Seven industrial nations—France, Canada, Japan, Germany, Italy, the U.S. and U.K.—disclosed plans to deny trade finance, maritime insurance, banking and brokering services to seaborne shipments of Russian oil above a yet-to-be-determined value per barrel, with the goal of choking off $1 billion in daily revenue to Moscow without taking the costly step of imposing a full embargo.

“We are not playing ‘gotcha,”’ Andrea Gacki, director of the Treasury’s Office of Foreign Assets Control, or OFAC, told attendees of an ACAMS webinar Monday. “We do not want to bring an enforcement action unless we see examples of evasion and knowingly engaging in a significant [above-cap] transaction.”

While U.S. refiners and commodities traders will have a clear expectation to remove themselves from above-cap transactions, banks and other institutions that finance those deals and maritime insurers that back them will be viewed as “second-tier” service providers that often lack direct knowledge on the price of a shipment.

OFAC advised financial institutions in guidance last month to obtain invoices, contracts or receipts “when practicable,” and review those records for indications of attempts to evade the cap. Abnormally low prices for oil and high costs for service may suggest that the parties involved have entered into secret price arrangements on the “back-end,” OFAC warned.

Financial institutions should also consider requiring their customers—crude oil buyers with whom they provide trade finance, for example—to attest in writing to their compliance with the restriction, and thus shield themselves from liability in the event that they inadvertently process an above-the-cap deal based on falsified records.

“If you rely on attestation and there are no red flags, you are not going to be a target of enforcement action for us,” Gacki said.

The G-7 will set the price cap at a level greater than the cost of production to incentivize Russian suppliers to continue selling crude oil on global markets. A second cap on petroleum products refined in Russia will come into force in February.

“This (restriction) is designed to keep oil flowing,” Treasury Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg said Monday. “It will reduce revenue that Russia can use to wage war by depressing the price.”

Western officials expect the price cap to give nations outside the G-7 power to negotiate lower prices, further cutting Russia’s revenue without having to impose sanctions on non-aligned countries and risk driving them closer to Moscow.

Unconvinced by this approach, the ranking member of the Senate Banking Committee pitched legislation on Sept. 29 that would direct federal officials to bar any non-U.S. entities caught paying Russia above-cap prices from the U.S. financial system and freeze their assets.

“It’s time to escalate the cost of the Kremlin continuing this war,” Sen. Pat Toomey (R-PA) said in a statement attached to the legislation, which he and his co-sponsor, Chris Van Hollen (D-MD), want folded into this year’s iteration of the National Defense Authorization Act, an annual defense-spending bill.

Russia’s ability to ship oil by pipeline to refineries near Harbin, China, would fall outside the G-7 cap on maritime shipments.

“It’s the Chinese that are going to make out on this,” John Cassara, a former Treasury agent focused on trade-based money laundering, told ACAMS moneylaundering.com in an interview.

The White House has barred U.S. domestic consumption of Russian oil, coal and liquified natural gas at any price since March, though U.S. refineries still have permission to acquire and process those products for sale to other countries.

Global shipping companies should meanwhile already be on the lookout for deceptive practices after OFAC, the State Department and Coast Guard issued an advisory in May 2020 that described attempts by Iran, North Korea and Syria to evade energy sanctions, including via ship-to-ship transfers, manipulated identification systems on vessels and altered bills of lading.

Russian domestic producers have warned that they may withhold sales to buyers in countries that observe the G-7 price cap, a move that could drive up global prices at the cost of the country shutting down a portion of its production capacity.

“Once that’s turned off,” Rosenberg said, “it’s not necessarily easy to turn it back on.”

Contact Fred Williams at fwilliams@acams.org