U.S. Treasury Secretary Janet Yellen speaks while chairing a meeting of the Treasury Department’s Financial Stability Oversight Board on May 10, 2024 in Washington, DC.
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U.S. Treasury Secretary Janet Yellen told Reuters that European banks face growing risks operating in Russia and the United States is considering tightening secondary sanctions on banks found to have facilitated transactions for Russia’s war activities.
“We are looking at possibly strengthening sanctions on banks that do business in Russia,” Yellen told Reuters in an interview, but declined to provide specific details or name which banks the sanctions might target.
Speaking on the sidelines of a meeting of Group of Seven financial leaders in northern Italy, Yellen said sanctions on banks’ transactions in Russia would only be imposed “if there is a reason to do so, but operating in Russia carries significant risks.” ” she added.
Asked whether she wanted to see Austria’s Raiffeisen International Bank and Italy’s UniCredit Bank withdraw from Russia, Yellen said: “I believe their regulators have advised them to be extremely cautious about their conduct in Russia.”
‘go out’
ECB policymaker Fabio Panetta issued clear instructions to the Bank of Italy on Saturday tell reporters Lenders must “leave” Russia because remaining in the country would bring “reputational problems.”
Raiffeisen is the largest European bank operating in Russia, followed by Italy’s UniCredit. Another large Italian bank, Intesa Sanpaolo Efforts are underway to dispose of its Russian operations.
US President Biden’s New Deal secondary sanctions authority The Treasury Department would have the power to cut banks off from the U.S. financial system if they are found to have helped circumvent key sanctions imposed on Russia and other entities over Moscow’s war in Ukraine.
Yellen and other Treasury officials have said the Russian economy is increasingly becoming a “war economy,” making it more difficult to distinguish between civilian and military, or dual-use, transactions.
The existence of secondary sanctions has cooled banks’ engagement with Russia, but Yellen expressed concern that Russia is seeking ways to obtain goods needed to boost its military production, citing transactions through China, the United Arab Emirates and Turkey. .
Warning Letter
Earlier this month, the Ministry of Finance Raiffeisen warned Citing a proposed 1.5 billion euro ($1.6 billion) deal with a sanctioned Russian tycoon, the company said in writing that it was not in a position to do so because of its dealings with Russia, a person who has seen the letter told Reuters. Companies’ access to the dollar-denominated financial system could be cut off.
After receiving the warning, Raiffeisen give up plan The industrial stake linked to tycoon Oleg Deripaska marks a setback for the bank more than two years after its invasion of Ukraine.
The pressure underscores Washington’s willingness to take European banks to task over their ties to Russia.
Yellen was in Frankfurt, Germany’s financial capital, on Tuesday. Warn bank CEOs Strengthen compliance with sanctions against Russia and cease evasive behavior to avoid the possibility of severe penalties.
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