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The Biden administration urges international banks not to help Russia evade sanctions and warns that companies risk losing access to markets in the United States and Europe if they support Russian companies or oligarchs experiencing financial constraints because of the war in Ukraine.

The admonition by a senior Treasury Department official highlights the US efforts to put pressure on the Russian economy through US financial power and underscores the widespread belief that the Biden administration is using its ability to impose sanctions. because it wants to isolate Russia from the global economy.

In private meetings Friday with representatives of international banks in New York, Adewale Adeyemo, the deputy treasury secretary, explained the implications of helping Russians evade sanctions. He pointed to the “material support provision” which dictates that even if a financial institution is located in a country that has not imposed sanctions on Russia, the company could still face consequences for violating US or European restrictions, including being cut off from those financial systems.

“If you provide material support to a sanctioned person or entity, we can extend our sanctions regime to you and use our tools to go after you too,” Mr Adeyemo said in an interview on Friday. “I want to make that very clear to these resident institutions and other countries that may not have taken sanctions: that the United States and our allies and partners are willing to act if they do things that violate our sanctions.”

The Biden administration has imposed sweeping restrictions on Russian financial institutions, oligarchs and its central bank. It has coordinated with allies in Europe and Asia to counter sanctions evasion; the direct warning to foreign banks was part of that effort.

Financial institutions from China, Brazil, Ireland, Japan and Canada attended the meeting, which was organized by the Institute of International Bankers.

Mr Adeyemo said US banks had been careful to avoid violating US sanctions, but Russian individuals and companies wanted to set up trusts and use proxies as a temporary solution. He also pointed to companies that may be supporting sanctioned oligarchs who are trying to move their yachts to different ports to avoid seizures.

Most jurisdictions have complied with the sanctions, but some, such as the United Arab Emirates, have continued to provide a safe haven for Russian assets. The yachts of several Russian oligarchs are docked in Dubai.

“You’ve seen some Russian yachts come out of ports, countries that have extended sanctions to countries that haven’t,” said Mr. Adeyemo. “We want to make it clear to people that if you are a financial institution, and you have a company that is a customer that provides material support to one of these yachts, you, that company, could be subject to our material support provision.”

Referring to his message to foreign banks, he added: “You have to make sure that you not only make sure you monitor the flows of money to your financial institution, but you also have to help by helping the companies you support. remember that they, also, you don’t want them to provide material support to Russian oligarchs or Russian companies as well.”

Banks and financial institutions around the world are grappling with how to keep up with the waves of new sanctions against Russia.

Citigroup, the largest US bank in Russia, with about 3,000 employees there, was in “active dialogue” to sell its Russian consumer and commercial banking business, Jane Fraser, its CEO, told Bloomberg this month.

Citigroup reduced its exposure in Russia to $7.9 billion in March, from $9.8 billion late last year, according to a filing. “This arming of financial services is a very, very big problem,” Ms Fraser said at a conference this month. She said she expected global capital flows to fragment as nations developed new financial systems to avoid becoming overly dependent on Western companies.

Foreign banks with operations in the US can get caught between conflicting demands. In some cases, US sanctions have forced them to cut off old customers. Those who resisted this learned how serious the authorities could be about tracking down violators and imposing heavy fines.

In 2019, for example, British bank Standard Chartered paid $1.1 billion to settle cases brought by the Justice Department, Treasury, the New York State Bank’s regulator and prosecutors over transactions it conducted for Cuba, Syria , Iran and Sudan in violation of US sanctions. Two years earlier, Deutsche Bank paid $630 million after it was caught helping Russian investors smuggle $10 billion into Western financial centers. International giants HSBC and BNP Paribas have also paid billions over the past 10 years to resolve cases of sanctions violations.

Lananh Nguyen reporting contributed.

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