Why haven't sanctions on Russia stopped Ukraine war? The money is still flowing

Financial institutions that facilitate Moscow's cross-border trade not being found, punished

- Aaron Krolik

MOSCOW - What kind of power can the US exert to punish other countries for their misdeeds? The answer, in the age of nuclear weapons, has been economic power.

Impose sanctions and cut off access to the US dollar, the thinking goes, and the excruciating economic pain will force a rogue country to play nice.

And yet, Russia - by some measures the most sanctioned country on earth — shows little urgency to do what the US and European nations want: end its war in Ukraine.

Since Russia's full-scale invasion in 2022, the US has put more than 6,000 individuals and companies with ties to the Russian war effort on the official sanctions list.

For these prohibitions to work, the financial institutions that move money across borders must screen transactions and cut off illicit activity. If they do not, they could face steep penalties from the US, including fines or exile to the sanctions list themselves.

Nonetheless, Russia has managed to conduct hundreds of billions of dollars in cross-border trade.

One reason could be that the financial institutions necessary to facilitate that trade are not being found and punished.

A New York Times analysis found that eight of the 10 largest settlements for global sanctions violations since 2014, when sanctions were first imposed on Russia over its annexation of Crimea, were against financial institutions.

But only two of those cases involved Russia: one against a venture capital firm that managed money for a Russian oligarch who was under sanctions, and the other against Binance, a cryptocurrency exchange. And Binance was not primarily fined for helping Russia; it had also greased the financial pathway for other countries facing sanctions, including Iran, North Korea, Syria and Cuba.