The United States described schemes for legally circumventing sanctions when trading oil from Russia The United States explained how the increased sanctions

The US Treasury provided explanations on how the US sanctions against Russia, which have been tightened in the past two weeks, affect its energy sector, in particular, trade in Russian energy resources in dollars. Earlier, the agency issued a general license that excludes transactions involving sanctioned Russian banks “related to energy” from the influence of sanctions. Now the US is clarifying that this does not mean that Americans can directly interact with blocked banks in this area. Special bypass transactions will be needed - and the US has instructed how to implement them.

U-shaped transactions

“Energy payments can and should continue,” the US Treasury said. The issued license allows what is “normally known as U-turn transactions,” the agency says. As part of such transactions, payments from foreign counterparties are processed through sanctions-free financial institutions in third countries, coming from them to the DOLLAR account of the Russian company in the sanctioned bank. The instruction allowing such transactions applies to such financial structures that have fallen under US sanctions, such as the state corporation VEB.RF, VTB banks, FC Otkritie, Sovcombank, Sberbank (it did not fall under blocking sanctions, but it was forbidden to have correspondent relations in the usa), as well as the Central Bank of Russia. PSB and Novikombank, which fell under blocking sanctions due to their connection with the defense sector,

If a company buys oil from a Russian supplier, it will be able to transfer a dollar payment to him through an unsanctioned bank in a third country acting as an authorized intermediary, the US Treasury cites the example. Thus, the sanctioned bank will be able to receive commissions from the Russian seller for such transactions, Brian O'Toole, a former senior adviser to the OFAC Sanctions Unit of the US Treasury, told RBC.

U-shaped deals were used by the US Treasury in sanctions programs against Iran in 1995-2008 and against Cuba in 2016-2019, recalls O'Toole. For example, in 2016, then-U.S. President Barack Obama authorized U.S. banks to make a range of dollar-denominated payments between Cuban buyers and non-U.S. suppliers. These transactions are called U-shaped because dollars, on the way from the initiator of the payment to the beneficiary, enter the American financial system (to the correspondent bank) and exit it back.