Filip De Mott
March 19, 2024
Business Insider
Several global banks that have helped Russia circumvent Western sanctions are now turning their backs on Moscow as the US has increased pressure to comply. The Wall Street Journal reported that financial institutions in the United Arab Emirates, Turkey, and Austria were shifting away from Russian business, in fear that it risks punishment from Washington. In December, an executive order granted the US Treasury broader sanctioning power, enabling it to pursue foreign banks that facilitated transactions with Russia. If targeted, these institutions could lose access to correspondent US banks, which act as the backbone of global finance.
Months later, Deputy Treasury Secretary Wally Adeyemo said the threat of secondary sanctions was proving fruitful, with a notable decrease in financial flows between Moscow and Middle Eastern banks. “Because ultimately for them, even though they may do some business with Russia, it pales in comparison to the amount of business they do with the United States or the business they do in the dollar,” he told Reuters in February.
Among the banks changing course are Emirates NBD, a UAE state-owned institution, the Journal said. After Russia’s invasion of Ukraine in 2022, the bank managed Russian oil trades and initiated a department focused on Russian wealth, sources told the outlet.
However, it has since done away with the department, cut off ruble transfers, and shut down a number of Russian accounts. The Journal’s sources indicated that closed accounts also included those of companies that did business with Russia, which could disrupt its ability to facilitate trade.
Beyond the UAE, Turkish institutions have also come under pressure, causing exporters in the country to face payment difficulties as financial flows are broken off. In fact, exports to Russia dropped 33% from a year prior, the Journal reported.
While Turkey and Russia have kept strong ties, US sanctions have soured the trade partnership between the two. Early in March, a key Turkish oil terminal chose to halt Russian imports, citing pressure from sanctions.
Austrian banks have also been put on notice by the Treasury. One institution, the Raiffeisen Bank International, has maintained a presence in Russia, as its attempts to exit the country have proved difficult.
Filip De Mott reports for Markets Insider. He graduated from James Madison University in 2022 with a BA in journalism and international affairs. After college, Filip joined the Dow Jones News Fund internship to help cover business activity in Richmond, VA.