Treasury says US firms must tighten compliance with Russia sanctions

By Susan Heavey

WASHINGTON (Reuters) - Manufacturers and distributors need to step up compliance with Russia-related sanctions amid the war in Ukraine, U.S. Deputy Treasury Secretary Wally Adeyemo told CNBC on Tuesday.

U.S. companies in particular need to pay more attention to their supply chains to ensure they are not complicit with Russia's evasion of sanctions over Ukraine, Adeyemo said in an interview.

Adeyemo said manufacturers of microelectronics and machine tools especially needed to step up compliance to help cut off supplies of "dual use" goods to Russia, including from Chinese producers. Freight forwarders and distributors need to do the same and financial institutions need to look at their relationships with small and medium-sized banks in "countries of concern" because Moscow is looking for ways around U.S. sanctions, Adeyemo said.

Asked whether U.S. manufacturers and banks are complicit in Russia's efforts to evade sanctions, Adeyemo said: "Every time I talk to a major CEO, they ask me what more can they do?

"And I want to deliver that message, not just the ones who are calling, but to all the CEOs across our coalition," Adeyemo said. "And what we need you to do is to pay more attention to supply chains and also to the banks that you're working with."

Adeyemo said that without supplies of goods from China, including machine tools and engine parts, Russia's military-industrial complex "would grind to a halt." China can have a robust economic relationship with Russia, but it cannot include goods that can be used in military production, he added.

(Reporting by David Lawder and Susan Heavey; Editing by Chizu Nomiyama)