Security experts say banks must consider their exposure to the Russian economy and be on guard for potential cyber threats as the war in eastern Europe continues amid punishing Western sanctions.
Juan Zarate, a former assistant secretary of the treasury and a national security expert, and Nitin Natarajan, deputy director of the Cybersecurity and Infrastructure Security Agency, described the current environment March 8 during the American Bankers Association’s Washington Summit.
Natarajan said though the U.S. financial sector doesn’t face “current, direct threats” from the invasion, he told bankers not to loosen their current reporting standards. They should communicate with each other whenever a potential security problem comes up, he said, noting attacks could come as Russian leaders look to retaliate against sanctions.
Zarate said the United States can ease illicit economic activity by the Russian government by using Section 311 of the USA Patriot Act, which authorizes the secretary of the treasury to take action against money laundering and terrorist financing risks. To Zarate, the current sanctions regime is a proactive way to address Russian corruption and could make future aggression from Russia less likely. He called President Joe Biden’s March 8 executive order banning the import of Russian oil and gas “a natural next step” as the war continues. Russia has reportedly used their oil and gas industry exports — 40 percent of the country’s revenue — as a shield to sanctions.
The European Union recently kicked seven Russian banks off the Society for Worldwide Interbank Financial Telecommunication system, which facilitates trillions of dollars of cross-border payments between 11,000 financial institutions. That decision has reportedly driven Russia even more into the crypto sphere and into closer collaboration with China. Over the past eight years, the two countries have focused on establishing their own bank management systems to avoid depending on SWIFT, which they see as a major vulnerability.
Western-based private firms are separately divesting from Russian investments. As reported by Forbes, fuel giant Shell has stopped buying Russian oil and gas, and sportswear retailer Adidas closed its stores and online sales in Russia. Other major companies such as Netflix and TikTok are also distancing themselves from the country.
Zarate called Western sanctions on Russian oligarchs and banks “unprecedented” in their scope, scale and potential impact. Economic sanctions are not expected to subside anytime soon. During a speech at the Washington Summit, Ranking Financial Services Committee member Patrick McHenry (R-N.C.) expects the U.S. commitment to eastern Europe will strengthen to its highest level in decades as the invasion continues.
As reported by the Associated Press, 2 million people — half of them children — have fled Ukraine since Russia invaded the country less than two years ago, making it Europe’s worst refugee crisis since World War II. Thousands of people are believed to have been killed in the conflict, both civilians and soldiers. An actual number remains unknown.