Russia's $5B Sanctions Evasion: JPMorgan, Citigroup Caught in Crossfire

Russia is alleged to have transferred $5 billion through two major U.S. banks, JPMorgan Chase and Citigroup, in an attempt to evade U.S. sanctions, according to a report by the Wall Street Journal. The report, citing people familiar with the matter, claims that Russia used a state-controlled bank to move the funds through correspondent U.S. banks and into Turkey, disguising the transfers as funding for a nuclear plant.

The U.S. Justice Department (DOJ) is investigating the alleged scheme, which involves the use of unsanctioned entities, including Gazprombank, a state lender that allows European countries to import fuel from Russia. The DOJ believes that Russia attempted to establish an offshore dollar fund at Turkey's state-owned Ziraat Bank.

The DOJ investigation found that Gazprombank shifted $3 billion through Citibank and $2 billion through JPMorgan. The large payments triggered alarms at the DOJ, prompting authorities to block and freeze the $2 billion Chase transaction. The DOJ filed a civil forfeiture suit last year to seize the frozen $2 billion.

However, the White House reportedly asked the DOJ to back off amid concerns that the order might antagonize Turkey, a country serving major importance for U.S. interests in the Middle East. The DOJ also stated that it is not probing JPMorgan or Citi for any wrongdoing in facilitating the billion-dollar transfers.

The alleged scheme highlights the ongoing efforts by Russia to circumvent U.S. sanctions, which have been imposed in response to various geopolitical issues. The use of unsanctioned entities and offshore funds is a common tactic employed by countries seeking to evade sanctions. The DOJ's investigation into the matter is ongoing, and it remains to be seen whether any further action will be taken against Russia or the involved banks.