The US Treasury Department announced on Wednesday that it has expanded its wide range of sanctions to include companies and individuals who help Russia escape the impact of economic sanctions imposed on Moscow.
Treasury officials said the department is now targeting Russian commercial bank Transkapitalbank as well as a network of more than 40 people, including oligarch Konstantin Malofeev, whom it believes are helping the Kremlin evade a wave of economic sanctions.
The Biden administration also said it is cracking down on companies involved in Russia’s virtual currency mining industry, including Bitriver, which help the country monetize its exports and other natural resources.
“The Treasury Department can and will target those who evade, seek to evade, or assist in circumventing US sanctions against Russia as they help support Putin’s brutal post-election war,” the undersecretary of state for Russia said Terrorism and Financial Intelligence Brian Nelson in a press release.
“The United States will work in close coordination with our international partners to ensure that the sanctions we impose will affect the Kremlin’s ability to project power and fund its invasion,” he added.
A privately owned Russian bank, Transkapitalbank has offered to help Moscow avoid detection- and sanction-related restrictions through a proprietary internet-based banking system known as TKB Business, the finance ministry said in a statement announcing the penalties.
That system, Treasury Department officials said, is an alternative communication channel to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. It is also designed to process US dollar payments for sanctioned customers.
Earlier this year, the US, European Union, Canada and Britain cut a handful of Russian banks from the SWIFT financial network, in one of Washington’s strongest moves yet to isolate Russia from the global market and cripple its economy.
This move effectively prevented Russia from securely communicating with banks outside its borders.
The Treasury also said it was stepping up efforts to dismantle a global “sanctions evasion and malicious influence” network led by Russian oligarch Malofeyev.
Malofeev was first targeted by the US in 2014 for his role in activities that “threaten the peace, security, stability, sovereignty or territorial integrity of Ukraine”. At the time, the Office of Foreign Assets Control determined that Malofeyev was one of the main sources of funding for Russians promoting separatism in Crimea.
“In recent years,” the Treasury Ministry said Wednesday, “Malofeyev has secretly or through intermediaries supported pro-Russian activities that undermine democracy, meddle in elections, and harm security and stability in a variety of countries.”
The announcement also marks the first-ever attempt by the Biden administration to sting Russia’s virtual currency mining industry.
Companies affected by US sanctions include Bitriver, a company founded in 2017 that uses hydropower to power its mining rigs.
The Office of Foreign Assets Control named 10 Russian-based Bitriver subsidiaries in its latest wave of sanctions.
“Russia has a comparative advantage in crypto mining due to energy resources and a cold climate,” Finance Ministry officials said on Wednesday. “However, mining companies rely on imported computer equipment and fiat payments, making them vulnerable to sanctions.”
“The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the effects of sanctions,” they added.
— CNBC’s MacKenzie Sigalos contributed to this report.