U.S., UK, EU officials met with financial firms on Russian sanctions evasion

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – Senior officials from the United States, Europe and Britain met on Thursday with financial institutions to brief them on efforts by Russia to evade Western sanctions imposed over its invasion of Ukraine, a senior U.S. Treasury official told reporters.

The firms – from the United States, Britain and Europe – assured the officials that they were working hard to avert Russian efforts to evade sanctions and export controls, said the official, speaking on condition of anonymity.

The meeting took place on the sidelines of the World Bank and International Monetary Fund spring meetings, where top U.S. intelligence officials shared information on how Russia is using its GRU military intelligence agency and Federal Security Service (FSB) to try to evade sanctions and export controls.

Washington and its allies are ratcheting up their enforcement of the massive raft of sanctions they have imposed on Russia, and cracking down hard on any evasion efforts, the official said, noting Moscow was facing critical shortages of materials needed to produce ammunition.

“To a person in that room, those financial firms demonstrated a willingness to do what they‘ve been doing since the beginning of the war – which is to take seriously trying to prevent Russian evasion of those sanctions and export controls, not just in our jurisdictions, but also in third countries,” the senior official said of Thursday’s meeting.

Treasury said participants included Deputy Treasury Secretary Wally Adeyemo; EU Commissioner Mairead McGuinness; and Britains Treasury Director General for International Finance Lindsey Whyte, along with CIA Deputy Director David Cohen and Deputy Director of National Intelligence Morgan Muir.

“The officials shared information about the most critical goods sought by the Russian military and emphasized that the Kremlin has directed its intelligence services to find ways around sanctions in order to replenish badly depleted supplies,” Treasury said.

Washington on Wednesday imposed sanctions on over 120 targets, including entities linked to Russian state-held energy company Rosatom and firms based in partner nations like Turkey in a sign of stepped-up enforcement.

The sanctions, imposed by the Treasury and State departments in concert with Britain, hit entities and individuals in over 20 nations and jurisdictions, including a Russian private military company, a China-based firm and a Russian-owned bank in Hungary.

Washington is also working closely with authorities in Switzerland, a major global banking center, which has made it clear that it does not want to be seen as a haven for the evasion of sanctions on Russia, the official said.

“My hope is that in the coming weeks we‘ll have announcements in terms of how we’re going to deepen that partnership even more,” the official added.

Treasurys top sanctions official, Undersecretary Brian Nelson, will visit Switzerland next week to discuss further moves to crack down on sanctions evasion, with additional stops in Italy, Austria and Germany, Reuters reported last week.

Elizabeth Rosenberg, Treasurys assistant secretary for terrorist financing and financial crime, will travel separately to Kazakhstan and Kyrgyzstan.

“We know that right now were in a decisive period where Russia not only needs the electronics to create precision missiles, but they need the smaller things in their economy to build ammunition,” the official said.

The official said U.S. officials had also looked at some specific cases involving a price cap imposed on Russian oil by Group of Seven countries and Australia, and had reached out to some insurance companies about actions they may want to take.

“We are taking those actions on a regular basis,” the official said, adding that U.S. officials had not seen a great deal of evasion activity with regard to the price cap.

(Reporting by Andrea Shalal and David Lawder; Editing by Chris Reese and Andrea Ricci)