The treasury secretary has urged financial institutions to comply with restrictions on Russia or face penalties
US Treasury Secretary Janet Yellen © Getty Images / Chip Somodevilla
German bank executives need to increase their compliance with sanctions on Russia, and shut down any efforts to circumvent them, US Treasury Secretary Janet Yellen warned on Tuesday during a meeting with bankers in Frankfurt, according to Reuters.
The US official reportedly stressed that Russia must not be allowed to procure “sensitive goods” to aid its military operation in Ukraine, and warned that Washington now has the authority to hit foreign banks with secondary sanctions if they are believed to be aiding Russian military-related transactions.
“I urge all institutions here to take heightened compliance measures and to increase your focus on Russian evasion attempts,” Yellen said, warning that those who fail to do so may be prevented from using the US dollar.
Reuters reported that she also told the executives to police sanctions compliance at their foreign branches and subsidiaries, and reach out to foreign correspondent banking customers to do the same, especially in high-risk jurisdictions.
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Yellen suggested that Russia is now “desperate” to obtain critical goods from Germany and the US, and that such countries must “remain vigilant to prevent the Kremlin’s ability to supply its defense industrial base and to access our financial systems to do so.”
Earlier this month, Reuters also reported that the US Treasury had threatened to cut off the access of Raiffeisen Bank International (RBI) to the American financial system due to its continued activity in Russia.
The Austrian lender is one of the few foreign banks that has yet to suspend operations in Russia despite Western sanctions. However, in a letter seen by Reuters, US Deputy Treasury Secretary Wally Adeyemo warned that RBI’s continued presence in Russia threatened US national security, and suggested curbing its access to the US dollar.
After the warning, RBI announced it would no longer expand its business in Russia, while a spokesman for the group said it had “significantly reduced” its presence in the country to mitigate the risks from sanctions.
“RBI will continue to work towards the de-consolidation of its Russian subsidiary,” the spokesperson told Reuters.
The European Central Bank has also pressured all banks in the Eurozone to speed up their exits from Russia or face US sanctions – and instructed them to submit an “action plan” by next month detailing how they will suspend their operations in the country.
