G7 to warn small Chinese banks on Russia links

US officials expect the Group of Seven (G7) wealthy democracies to send a tough new warning next week to smaller Chinese banks to stop assisting Russia in evading Western sanctions, according to two people familiar with the matter, News.Az reports citing Reuters.

Leaders gathering at the June 13-15 summit in Italy hosted by Prime Minister Giorgia Meloni are expected to focus heavily during their private meetings on the threat posed by burgeoning Chinese-Russian trade to the fight in Ukraine, and what to do about it.

Those conversations are likely to result in public statements on the issue involving Chinese banks, according to a U.S. official involved in planning the event and another person briefed on the issue.

The United States and its G7 partners - Britain, Canada France, Germany, Italy and Japan - are not expected to take any immediate punitive action against any banks during the summit, such as restricting their access to the SWIFT messaging system or cutting off access to the dollar. Their focus is said to be on smaller institutions, not the largest Chinese banks, one of the people said.

Negotiations were still ongoing about the exact format and content of the warning, according to the people, who declined to be named discussing ongoing diplomatic engagements. The plans to address the topic at the G7 were not previously reported.

The White House did not respond to a request for comment. The U.S. Treasury Department had no immediate comment, but Treasury officials have repeatedly warned financial institutions in Europe, China and elsewhere that they face sanctions for helping Russia skirt Western sanctions.

Singh and other top Biden administration officials say Washington and its partners are prepared to use sanctions and tighter export controls to reduce Russia's ability to circumvent Western sanctions, including with secondary sanctions that could be used against banks and other financial institutions.

Washington is poised to announce significant new sanctions next week on financial and non-financial targets, a source familiar with the plans said.

This year's G7 summit is also expected to focus on leveraging profits generated by Russian assets frozen in the West for Ukraine's benefit.

Washington has so far been reluctant to implement sanctions on major Chinese banks - long deemed by analysts a "nuclear" option - because of the huge ripple effects it could inflict on the global economy and U.S.-China relations.

News.Az