- New sanctions pressure from the US Treasury is pulling foreign banks away from Russia, the Wall Street Journal reported.
- Banks in the UAE, Turkey, and Austria are working to reduce their transactions with Moscow.
- This is disrupting Russia's oil trade, which is facilitated by some of these banks.
A string of global banks that have helped Russia circumvent Western sanctions are now turning their back on Moscow, as the US has increased pressure to comply.
According to The Wall Street Journal, financial institutions in the United Arab Emirates, Turkey, and Austria are shifting away from Russian business, in fear that it risks punishment from Washington.
In December 2023, an executive order granted the US Treasury broader sanctioning power, enabling it to pursue foreign banks that facilitate transactions with Russia. If targeted, these institutions could lose access to correspondent US banks, which act as the backbone to global finance.
Months later, Deputy Treasury Secretary Wally Adeyemo cited that 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 banks changing course are Emirates NBD, a UAE state-owned institution, WSJ 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. WSJ sources indicated that closed accounts also included those of companies that do business with Russia, potentially disrupting 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, WSJ reported.
Although 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 proven difficult.