G-7 and EU consider tougher sanctions on banks helping Russia evade Ukraine war sanctions

The Group of Seven (G-7) nations and the European Union are exploring stricter measures against banks aiding Moscow in evading sanctions. Bloomberg cited anonymous sources as saying that some proposals involve targeting third-country financial institutions that utilize Russia’s SWIFT-like messaging system to bypass trade restrictions.

These deliberations are taking place ahead of a G-7 summit in Italy next month, where leaders intend to solidify strategies for more effective enforcement of sanctions against Russia due to its conflict with Ukraine.

The G-7 has consistently focused on preventing Russia from acquiring critical technologies essential for weaponry. However, Russia has circumvented many of these bans by channelling prohibited goods through countries like China, Turkey, the United Arab Emirates, and Central Asian nations, often using complex networks of intermediaries spanning various jurisdictions.

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Last month, the United States and the rest of the “Group of Seven” major economies will unveil new sanctions and export controls targeting Russia over its war against Ukraine, a U.S. official said ahead of a G7 summit in Japan.

G7 leaders are gathering in Hiroshima on Friday with the invasion of Ukraine, now in its second year, opens new tab, high on the agenda. The U.S. has spearheaded tough sanctions on Russian companies, banks and individuals, and the coming announcement is designed to reaffirm world powers’ resolve to support Ukraine and squeeze Moscow.The United States and its allies, including the European Union and Britain, have continued to ratchet up sanctions and export-control pressure on Russia since the invasion of Ukraine began in February 2022. Thousands of targets hit with sanctions by Washington so far have included Russian President Vladimir Putin, the financial sector and oligarchs.

Washington over the past few months has cracked down on sanctions evasion with a heavy focus on dual-use items - those which have both commercial and military applications.

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The latest U.S. sanctions package will include “extensively restricting categories of goods key to the battlefield” as well as preventing some 70 entities from Russia and third countries from receiving U.S. exports by adding them to the U.S. Commerce Department’s blacklist.

In addition, the United States will announce some 300 new sanctions against individuals, entities, vessels and aircraft targeting “financial facilitators”, Russia’s future energy extracting capabilities, and others across Europe, the Middle East and Asia helping to support the war.

U.S. sanctions authorities would also be expanded to more sectors of the Russian economy.

The U.S. official said Washington would take significant steps to align its actions closely with the EU and Britain to ensure that the G7 remained as coordinated as possible in response to “Russia’s brutal actions”.

With inputs from agencies.