Treasury and State Departments Should Investigate Reports of Sanctions-Busting Russian Banks

Washington, D.C. – Human Rights First calls on the U.S. Treasury Department to investigate reports of sanctions-busting by Russian banks that are enabling the regime of Syria’s Bashir al-Assad. Specifically, the organization asks Treasury and the State Department to determine if a report by Reuters is correct that Russia’s Tempbank is holding accounts from and may be facilitating transactions for the Commercial Bank of Syria, an entity that has been designated for U.S. sanctions.

“Treasury has previously warned Russian banks to stop financing Assad’s war. Now it’s time to investigate banks that have failed to heed those warnings and if substantiated, designate them for U.S. sanctions,” said Human Rights First’s Sonni Efron.  “If the Russian government, which supports Assad, will not stop its sanctions-busting banks, Treasury must take action.”

The report on Russian banks comes amid a sharply worsening military situation in Syria, where more than 115,000 people have died since the uprising against Assad began in March 2011, and of a mushrooming humanitarian catastrophe for Syria and its neighbors.

At a Senate Foreign Relations Committee hearing today, State Department Assistant Secretary Thomas Countryman testified that Russian military deliveries have now become more significant than military aid from Iran. Former Ambassador Frederic C. Hof and Council on Foreign Relations expert Leslie Gelb said that military aid to hardline Islamist rebels from Saudi Arabia and Qatar are keeping the extremists well-supplied while the moderate rebels are last-equipped and weakest.

The United States has unilateral sanctions against Assad’s regime, including against the Syrian Central Bank and the Commercial Bank of Syria, as does the European Union, but Russia and China have blocked efforts to impose United Nations sanctions that would cover all countries and financial institutions. However, the United States can under existing authorities require U.S. banks to cut off the corresponding New York accounts of third-party banks involved in sanctions-evasion.

Reuters obtained a fax sent on August 6 from the Commercial Bank of Syria to Tempbank, proposing the opening of a barter account that would allow Damascus to trade goods or oil for foodstuffs that would be shipped from Ukraine. Ukraine is one of the world’s largest weapons exporters, although the government insists it is not allowing weapons shipments to Syria.

Tempbank has ties to financial markets in China, Europe and the United States, using Austria’s Raiffeisen Bank as well as Russia’s biggest state-owned banks Sberbank and a foreign office of VTB as intermediary banks, Reuters reported. The larger Russian banks claim to have no dealings with Assad.


Published on October 31, 2013


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