By Rick Manning
Since 2022, the Biden Administration has not only allowed Vladimir Putin’s full-scale Russian invasion of Ukraine, but their policies have also failed to bring the war to an end and allow Ukraine to begin to rebuild.
Luckily, President Trump has reiterated his pledge to end the war once he returns to office, reducing American taxpayers from having to continue sending foreign aid and finally pushing Putin back into Russia and out of Ukraine. As the incoming Trump Administration considers next steps, President Trump can increase his leverage and negotiating power by closing loopholes in existing Russian sanctions and go after bad actors helping to fund the Russia war machine.
A vast majority of U.S. lawmakers have been supportive of sanctions against Russia. Yet the problem with these measures – and what is often used as an argument against them – is that their implementation is not always effective. Despite embargoes on Russian fuel in Europe and bans on services for Russian individuals and companies, Russian oil and capital have continued to infiltrate the global market.
Nevertheless, U.S. sanctions on Russian entities—rules preventing American companies from dealing with sanctioned actors—can be meaningful. We have seen cases that illustrate that purpose: earlier this year, State Street Bank settled with OFAC (Office of Foreign Assets Control) for nearly $7.5 million after allegedly bypassing sanctions requirements.
Yet despite these examples, capital still flows in and out of Russia, facilitated by willing parties in the United States. As the war has dragged on, it has become evident the Biden Administration’s approach to sanctions has fallen short, as companies found ways to keep the money moving, and the Trump Administration will need to step up its enforcement to close loopholes and go after outstanding bad actors in order to bring the war to an end.
A glaring example of how companies have slipped through the cracks of sanctions enforcement is San Francisco-based tech startup Deel. This company has come under scrutiny for numerous Russia-related activities, including facilitating HR services for businesses operating in Russia, partnering with Russian financial institutions, and even counting Russian oligarch Roman Abramovich as an investor.
Deel’s methods include reliance on cryptocurrency to transact with foreign individuals and entities, mirroring the precise mechanism Russia officially endorses to skirt sanctions and maintain its ties with the outside world.
One of Deel’s founders – who appeared alongside now disgraced fraudster Sam Bankman Fried in Forbes’ 2021 30 under 30 in Finance – has openly touted his company having experienced massive growth because it allows companies to hire workers overseas “without having to worry about compliance regulations in different countries.”
In addition to creating workarounds to continue new investments in Russia despite U.S. sanctions prohibiting them, Deel has reportedly partnered with T-Bank, which is controlled by Russian oligarchs and already sanctioned by the U.S., U.K., and the European Union, so Russians can receive payments despite sanctions.
Just recently, a Racketeer Influenced and Corrupt Organizations Act (RICO) complaint was filed against Deel in federal court for the Southern District of Florida, where a court-appointed SEC receiver uncovered an alleged money laundering and sanctions-busting racketeering scheme between Deel, Arival Bank, a Puerto Rican crypto bank co-founded by Russian nationals affiliated with Deel, and T-Bank, a sanctioned Russian bank based in Moscow.
Deel and other companies just like it who are evading sanctions and funding Russia’s continued invasion of Ukraine exemplify why Washington’s current sanctions strategy is failing, and why the incoming Trump Administration must close the sanction loopholes if President Trump is to be successful in bringing the war to a close.
Sanctions, if left toothless, risk becoming a hollow gesture. To protect core values, maintain credibility, dissuade those who would profit from conflict, and end the war, Washington must bring its full economic arsenal to bear — so Trump has the leverage he needs — and shut off every entry point for Russian capital and stop the cash flow to Putin’s war machine.
Rick Manning is the President of Americans for Limited Government.
