ASPI Report Examines China and UAE Banking Exposure to Sanctions-Evasion Networks

Writing for the Australian Strategic Policy Institute's platform The Strategist, analyst Ramkishen Rajan reported that Washington needs closer coordination with financial supervisors across Asia and other regions to identify front companies processing payments for A7, a Russian-backed sanctions-evasion network. The US Treasury reported that front entities linked to A7 operate across several jurisdictions, including the United Arab Emirates, Hong Kong, Turkey, Kyrgyzstan, Indonesia, and the Seychelles.

The analysis detailed how A7 conceals Russian purchasers by accepting domestic ruble payments for bills of exchange inside Russia, while offshore corporate affiliates pay overseas suppliers directly. According to investigations cited by the author, the Financial Times traced over US$6.9 billion through international banks linked to the network, which included transactions mislabeling military-use night-vision scopes as toughened glass.

The piece highlighted vulnerabilities within correspondent banking networks, citing a New York Times investigation of a January 2025 transaction where a Russian entity purchased electromagnetic-warfare components from Hong Kong. In that transaction, First Abu Dhabi Bank arranged payment to an account held by China's Zhejiang Chouzhou Commercial Bank at Bank of America, which executed the transfer instructions without receiving underlying goods purchase details.

Rajan observed that foreign financial institutions face escalating secondary sanctions risks that threaten US dollar access for dealing with targeted Russian entities or sectors. In response, some firms have shifted to non-dollar alternatives such as settling cross-border yuan trade via China's Cross-Border Interbank Payment System, though institutions remaining connected to Western payment rails and digital tokens face tightening regulatory enforcement, including proposed US FinCEN restrictions barring domestic institutions from processing transactions with specified A7 affiliates.