"Put Sand in the Gears" of Kremlin's War Effort, says Adeyemo

"I was in Kyiv and Germany this week to discuss with my counterparts what we can do to continue to put sand in the gears of Russia’s war machine.

Dual Use Controls Vital

First and foremost, we must recognise that this machine is powered by and reliant on imported components critical to the manufacture of ammunition, missiles and tanks. Before, certain sectors of the Russian economy imported dual-use goods to carry out normal economic activity. But now Russia’s entire industrial base is on a war footing, we need to ensure that sensitive dual-use goods — from machine tools to microelectronics — are not getting into the country. We need the private sector to help us accomplish this goal. 

It is important to recognise that the success of our sanctions and export controls is only possible because of a partnership with the private sector. Companies have already done a great deal to help us constrain the Kremlin’s access to goods, but we need them to do more.

It is critical that our manufacturers take every step within their power to scrutinise their supply chains and prevent western-made equipment ending up in the weapons being deployed by the Kremlin. 

Banks: up your game

We also need financial institutions in our countries to examine their correspondent relationships in the nations that are providing the Russian military industrial base with material support. This includes paying special attention to the small and mid-sized banks that are often the Kremlin’s preferred vehicles to process payments for military goods. 

We recognise that doing this work is not easy and it takes time. It also can come at the cost of short-term profits, especially for those businesses that had long-existing relationships with Russia. But we should be clear-eyed that a Russian military backed by a mobilised economy will only grow in ambition.

Support for Industry

When I talk to the leaders of businesses across our coalition, they understand the stakes and are willing to do their part. They have rightly asked us for two things to help them help us.

The first is more information. It is critical that our coalition continue to provide detailed, actionable information and typologies to our companies that are working hard to do the right thing.

The second request has been for a risk-based regulatory and supervisory regime that allows them to better focus resources on our main concerns.

We are prioritising delivering these reforms to our anti-money laundering regime in the US. But we also know that other countries need to take steps such as improving their customs and export control regimes. 

In a later interview with CNBC, Mr. Adeyemo said he was not faulting U.S. manufacturers and banks as complicit in Russia's efforts to evade sanctions. "Every time I talk to a major CEO, they ask me what more can they do?

"And I want to deliver that message, not just the ones who are calling, but to all the CEOs across our coalition," Adeyemo said. "And what we need you to do is to pay more attention to supply chains and also to the banks that you're working with."