How The US Will Impose Russian Sanctions On British Banks
The Americans are really rather pissed off at the Russians these days. To the extent that they’ve decided to impose sanctions on a number of Russian oligarchs and their companies. Hmm, OK, well, that harms the Americans rather more than anyone else, right? Because it is those USians who cannot work with Russia, while the rest of the world is entirely free to do so. Sadly though, that’s not quite how it works. The secret is here:
A senior American official has warned that British banks will face “consequences” if they flout new sanctions against some of Russia’s wealthiest businessmen and biggest companies.
In words that are likely to cause concern in the boardrooms of financial services groups, Sigal Mandelker, under-secretary of the Treasury for terrorism and financial intelligence, said that US authorities would be on the lookout for any breaches of their Russian sanctions.
The penalties for banks caught doing business with those sanctioned could include heavy fines, as well as the loss of their US banking licence.
The way this does work is that the US claims authority over any business taking place in US dollars. They’re, well, just about right in this. People who swap cash dollars with each other aren’t covered. But anything which works through the banking system in dollars is. They proved this when they fined BNP Paribas billions for trading with Sudan. BNP is a French bank, Sudan’s not part of America either. There were US sanctions on not trading with Sudan. A French bank should not be covered then, should it? But it was and when caught it paid up too.
For the US says, as above, that transactions in dollars fall under US laws. The link being that in order to settle a transaction it will go through New York. That’s just the way the international banking system works. Transactions in £ sterling go through London, in Yen through Tokyo, in $ through New York. So, even if a French bank, in France, lends to Sudan, if they do it in $ then that’s a transaction that goes through New York and is subject to US law. Including those sanctions – pay up buddy for breaking them.
The same is true of these sanctions against Russia and Russians. Anything done in $ is regarded as being under US law. So, no one can deal with these Russians in $.
But it gets worse than that. For, obviously enough, this doesn’t cover people who deal with the Russians in £, or € or Yen. So, everyone can still deal with the Russians, right? Except no, and this is where the US gets a little controversial. For just about every bank even with pretensions to doing international business does some business in dollars, thus some business in the US. Meaning that they’ve got a US banking licence and a business in the US to protect.
What the US says is, yup, sure, strictly speaking our sanctions only apply to business in $ and if you work in another currency then you’re fine. Except that’s not the way we work, if you work in those other currencies then we’re going to have a good hard look at whether you can continue to do business in the US. And guess what, we bet we could find a reason why you can’t.
And that’s how the US will impose their Russian sanctions on British and global banks. You’ve sure got a nice US business here, be a shame if anything happened to it, wouldn’t it? The tactics of the Mob being used by a government, such a pleasant sight.
Posted: 14th, April 2018 | In: Money, News Comment | TrackBack | Permalink
