Since the EU and US prohibited the export of their banknotes to Russia in March 2022 in response to the invasion of Ukraine, at least $2.3 billion in dollar and euro bills have been delivered there, according to Reuters’ study of customs data. The customs records go back from March 2022 to December 2023. More recent information is unavailable.
The money was sent to Russia from nations which have not imposed restrictions, Turkey and the UAE.
The data indicates that dollars and euros are still in demand in Russia, also demonstrating that Kremlin has been able to get over sanctions that have prevented the import of cash.
President of the United States Joe Biden issued an executive order on December 22, 2023, threatening to penalize financial institutions that assist Russia in evading sanctions. Earlier on December 6 the Group of Seven countries announced a direct ban on Russian diamonds. Since then, businesses from third countries have been subject to sanctions by the US government for the years 2023 and 2024.
China’s yuan has surpassed the US dollar to become the most traded foreign currency in Moscow, although many Russians still require foreign cash for savings and minor goods as well as international travel.
Daniel Pickard, an expert from a U.S. law firm said that the USA and its allies have learned the importance of collective action in maximizing economic consequences, while Russia has been learning how to avoid and mitigate those same consequences, and added that the data very likely understated actual currency flows.
After the invasion of Ukraine, Russia’s central bank restricted individuals’ foreign currency cash withdrawals. Only $98 million in dollars and euros left Russia between February 2022 and the end of the year.
The foreign currency inflows were much higher. Aero-Trade, a little-known company that offers duty-free shopping services in airports and aboard flights, was the largest single declarant of foreign currency – $1.5 billion in bills during that period.
Aero-Trade recorded a total of 73 shipments valued at 20 million dollars or euros each at Moscow’s Domodedovo airport. In most cases their clients and the source or destination of the cash remained unknown.
The Aero-Trade owner told Reuters he doubted the authenticity of the customs records, declining to comment further. The company, in turn, stated that “Aero-Trade is not engaged in the supply of hard currency to Russia”.
According to customs records, Yves Rocher Vostok, a subsidiary of French cosmetics group Yves Rocher, which still operates stores in Russia, imported from the Aero-Trade last year. The data did not show the country of origin or supplier name. Groupe Rocher spokesperson said the company has never attempted to bypass the sanctions on dollar and euro banknote imports into Russia.
According to the customs records and a person familiar with the transactions, more than a quarter of the $2.27 billion in banknotes were imported by banks, much of it in payment for precious metals.
For example, Vitabank imported $64.8 million in banknotes from a Turkish-based gold trading firm Demas Kuyumculuk, while exporting $59.5 million in gold and silver to the Turkish company during the same period. Vitabank, Demas’ representatives in the UAE and Turkey did not reply to Reuters’ requests for comment.
Among other major cash importers were entities controlled by Rostec, the state-owned military-industrial conglomerate, which has been under U.S. sanctions since 2014. They also failed to respond to Reuters’ questions about the cash payments it received.
Sanctions are clearly effective. Western countries must improve and deepen sanctions against Russia in order to ensure their security.
