In 2022, Russia reportedly found a way to send billions of dollars to Turkey while sidestepping international sanctions. According to a U.S. Justice Department investigation, American banks, including JPMorgan Chase and Citigroup, helped facilitate more than $5 billion in transactions linked to a nuclear power plant project in Turkey. This financial flow occurred despite sanctions aimed at Russia, designed to limit its financial dealings with other countries.
Russian Scheme to Evade Sanctions
The money sent from Russia to Turkey was largely connected to the Akkuyu nuclear power plant, a project involving Russian companies and built in Turkey. The Justice Department believes this was part of a larger strategy to get Russian money out of Russia and into Turkey without directly violating sanctions.
Russia is heavily sanctioned by the U.S. and other nations due to its actions in Ukraine and other political matters. Sanctions are meant to limit Russia’s ability to conduct business internationally, especially in the financial sector. To get around these restrictions, Russia allegedly used a clever method, transferring money through American banks in a way that didn’t raise red flags.
The Justice Department’s investigation found that Russian funds were channeled into Turkey using complex financial techniques. The $9 billion loan, said to have been backed by Russia’s central bank, was funneled through a Russian bank, Gazprombank, which helped set up the transactions. This allowed Russian money to flow into Turkey, helping Russia avoid any direct dealings with sanctioned entities. The U.S. government believes that the funds were not just for the nuclear project, but also to create an offshore dollar reserve for Russian government projects.
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Frozen Funds and Legal Concerns
At least $2 billion of the Russian money transferred through American banks was later frozen by U.S. authorities. The goal was to stop the flow of money and to prevent further violations of U.S. law. However, this investigation ran into trouble in 2024. Although prosecutors wanted to seize the frozen money, the Biden administration decided to halt the legal actions.
The decision was made out of fear that continuing the legal case could damage relations between the U.S. and Turkey, an important NATO ally. The U.S. was concerned that pushing forward with the case might create diplomatic problems, especially in areas like prisoner exchanges and counterterrorism cooperation. The investigation also suggested that Turkish officials may have played a role in facilitating these payments, raising the stakes even higher for the U.S.
Turkey has not imposed sanctions on Russia, unlike other NATO countries. Instead, Turkey has continued to strengthen its ties with Russia, boosting trade and financial dealings while also providing military support to Ukraine. This relationship has caused tension between Turkey and some of its NATO allies, who have criticized Turkey for not fully supporting sanctions against Russia. Despite these concerns, the Turkish economy and central bank benefited from the Russian money, using it to help stabilize the country’s economy and support the lira amidst rising inflation.
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The Role of American Banks
American banks, including JPMorgan Chase and Citigroup, played a major part in these transactions. Both banks are known for being some of the largest and most influential financial institutions in the world. The Justice Department found that they helped move the Russian-backed funds into Turkey by processing transfers that seemed legitimate on the surface.
This revelation has raised serious questions about how financial institutions in the U.S. are handling transactions tied to countries under heavy sanctions. Despite being aware of the complex financial nature of the transfers, these American banks continued to process large sums of money linked to Russia. While some of the money was eventually frozen, the fact that these transfers occurred without immediate legal action has sparked concerns over how effective international sanctions really are in stopping illegal financial activity.
The case also highlights the challenges faced by U.S. authorities in policing financial flows in a globalized world where money can move quickly and easily between countries. The complexity of the international banking system makes it difficult to track and stop these types of transactions, especially when they are disguised as legitimate business activities
As the case remains on hold, it remains unclear what steps the U.S. government will take next. However, the investigation has uncovered a troubling example of how countries and companies can find ways to bypass sanctions and continue financial operations that might otherwise be blocked.
