Reported by TOM KEATINGE

In February 2022, I compared the UK’s first round of sanctions against Russia and the Putin regime to taking a peashooter to a gunfight. The threat of sanctions failed to deter Vladimir Putin’s full-scale invasion of Ukraine and their early imposition was slow and lacked bite. Western leaders were initially poor at articulating their ambitions — which ranged from “degrading and disrupting” Russia’s supply chains to “shaking” the foundations of its economy. But they are now restricting Moscow’s access to the international financial system and applying ever-greater trade restrictions. 

Far better than relying on uninterested states to react to a process or guidance they already disregard, is to pressure their companies. While the UAE, Turkey and South Africa may choose to ignore sanctions decisions made in Washington, London and Brussels, the interconnected nature of global trade means their companies and financial institutions cannot: they need connections to international partners and are thus sensitive to the signals they receive. 

For example, a bank in a non-compliant country that continues to offer financial services to designated companies or individuals will almost certainly require access to the international financial system. This access is most often provided by large, globally-operating banks located in the US, Europe or the UK that are required to implement sanctions to the letter. These correspondent banks must at the very least increase their scrutiny of these client banks, and if necessary sever their relationships altogether to avoid facilitating circumvention. Harnessing influence to coerce sanctions compliance in this way may seem distasteful, but so too is facilitating the funding and resourcing of Moscow’s war machine.

Read full report: https://www.ft.com/content/a9750db3-5d5c-4afb-a33e-e5b960b63a93