The US Treasury Department’s Office of Foreign Assets Control (OFAC) has threatened other countries that the opening of branches or subsidiaries of Russian banks abroad could be an attempt by Russia to evade sanctions imposed over the war in Ukraine.
OFAC warned foreign banks to exercise caution when dealing with newly opened foreign branches or subsidiaries of Russian financial institutions.
This warning includes entities not subject to US sanctions.
Foreign financial institutions dealing with such branches or affiliates should consider that they present significant sanctions risks, including account services, funds transfers or payments, trade finance, and other services such as insurance,’ the statement said.
However, it noted that transactions related to food, agriculture, medicine, energy, and telecommunications are still permitted activities.
OFAC stressed that the Treasury Department ‘has a number of tools at its disposal to thwart Russia’s attempts to finance its defence industry’. One such tool is the Bank Secrecy Act (BSA).
In 2021, the US amended the BSA to empower US regulators to request information from foreign banks with correspondent accounts in the US about any account, including information stored overseas, as part of investigations.
“OFAC’s new warning will lead to an expansion of the practice of closing accounts and suspending other related financial services,” said investment banker Yevgeny Kogan on his Telegram channel.
“The US Treasury has scared everyone so much that it now resembles racial discrimination. There are cases of reluctance to do business with people who do not live or work in Russia, but who also have a Russian passport or whose place of birth is listed in foreign citizenship as the Russian Federation/USSR,” Kogan added.
