The US has reminded banks in the UAE and Turkey to be mindful of international efforts to combat Russian sanctions evasion amidst concerns in Washington that locations such as the Gulf and Turkey could harbour illicit cash linked to the Kremlin, thereby softening attempts to freeze Russia out of the global financial system.
Before travelling on to Turkey, deputy secretary of the US treasury, Wally Adeyemo, visited the UAE where he underscored the need for continued vigilance and proactive action by financial institutions in combatting Russian sanctions evasion, including in the UAE.
No due diligence, no defence
Financial institutions must be exceedingly cautious in handling any Russia-related businesses and in managing the risks associated with financial institutions that have exposure to the Russian financial system, Adeyemo told the UAE Banks Federation Roundtable in Dubai.
The deputy secretary said he knew that Russian banks have employed deceptive payment practices and used shell companies and other means to hide the true nature of their transactions. “Failing to do the sufficient due diligence needed to know your customers is not a defence”, he warned.
Material support warning
Foreign financial institutions should be mindful of the Office of Foreign Assets Control’s
(’s) authority to target foreign persons for providing “material support” to a sanctioned entity, even if none of the entities touch the US financial system and are located outside the US the deputy secretary told the roundtable.
This “material support” provision exists in the majority of OFAC’s sanctions regulations, including those related to Russia he added.
Geopolitical positions
Adeyemo has also held discussions with financial institutions in Turkey about the implementation and enforcement of Western sanctions imposed on Russia following its invasion of Ukraine.
The UAE has not imposed sanctions on Russia or criticised its invasion of Ukraine and continues to provide visas to non-sanctioned Russians while many Western countries have restricted them.
Turkey has endeavoured to preserve its relationships with both Moscow and Kyiv and play a mediating role in the conflict but, even though it is a Nato member and has provided Ukraine with military support, it has not joined ranks with Western countries in imposing sanctions on Russia.
Categories: Trade Based Financial crimes News
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