Russian banks circumventing DASKAA - for now

RUSSIA / FSU POLITICS - In Brief 23 Mar 2019 by Alex Teddy

Russian banks and the Finance Ministry are drawing up a plan to get around DASKAA. This will be through correspondent accounts. A non-sanctioned bank would receive USD and pass them through a correspondent account to the sanctioned account. This tactic is not new.In August 2018 the US Congress passed DASKAA which listed seven leading Russian banks to be deprived of access to the US financial system. These were VEB, VTB, Sberbank, Gazprombank, Bank of Moscow, Rosselkhozbank and Promsvyazbank. In February 2019 DASKAA was updated. It does not name banks now but allows the president discretion to choose which banks to block. This seems like good news for Russia because Trump is not as hostile to Russia as his predecessor. Nonetheless the Russian financial sector is still spooked. As the Russian economy depends so much on exporting minerals it needs USD. There is no decent long term solution to this if access to large volumes of USD is denied. Correspondent bank accounts will not work forever. The US may soon find a way to counteract this maneuver. If foreign currency transactions in non-sanctioned banks shoot up then the US could simply hit those banks. It does not appear that Trump would do this but he is highly erratic. If Trump causes problems for Russian banks then the central bank could simply issue USD to a non-sanctioned bank to hand on to the sanctioned ones.

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