Billions in cash continue to flow into Russia despite sanctions – Reuters

A total of 2.3 billion in US dollars and euros have been sent to Russia since the US and EU banned the export of their currencies in March 2022, following the invasion of Ukraine.

As reported by Reuters, this previously undisclosed data indicates that Russia has managed to circumvent sanctions blocking cash imports, suggesting that dollars and euros remain useful tools for trade and travel, even as Moscow seeks to reduce its reliance on cash. 

Customs data obtained from a commercial provider that records and aggregates information shows that cash was imported into Russia from countries like the UAE and Türkiye, which have not imposed trade restrictions on Russia. The country of origin for more than half of the total amount was not specified in the documents.

In December, the US government threatened financial institutions with punitive sanctions if they assist Russia in circumventing sanctions and imposed sanctions on companies from third countries during 2023 and 2024.

Dmitry Polevoy, head of investment at Astra Asset Management in Russia, says that many Russians still want to have cash in foreign currency for travelling abroad, as well as for small-scale imports and domestic savings.

"For individuals, the dollar is still a reliable currency," he told Reuters.

The customs documents cover the period from March 2022 to December 2023, and Reuters was unable to access more recent data. 

The documents indicate a surge in cash imports just before the invasion. Between November 2021 and February 2022, Russia imported 18.9 billion in dollar and euro banknotes, compared to only US$17 million in the previous four months.

Daniel Pickard, International Trade & National Security Practice Group Leader at US law firm Buchanan Ingersoll & Rooney, believes that the surge in supplies before the invasion suggests that some Russians wanted to protect themselves against potential sanctions.

The Russian central bank quickly restricted the withdrawal of foreign currency by individuals after the invasion of Ukraine to support the rouble. 

The data shows that only 98 million in dollar and euro banknotes were withdrawn from Russia from February 2022 to the end of 2023. 

In contrast, the inflow of foreign currency was much higher.

Earlier, a journalist investigation revealed that drones, computer processors, GPS devices, memory cards, and other dual-use goods continue to be supplied to Russia through Georgia, despite Georgian authorities claiming to have closed loopholes for circumventing Western sanctions. 

In recent months, the West has increasingly focused on closing loopholes that allow Russia to continue evading sanctions.