The Money Is Drying Up: How US Pressure Is Choking Off Russia-China Payment Channels

The US Treasury Department has moved aggressively against a sanctions-evasion network linking Russia and China, exposing a secret payment channel used to facilitate cross-border transactions for sensitive exports and designating a Kyrgyz Republic-based financial institution accused of helping Moscow evade restrictions, according to the US Treasury’s official press release.

Inside the Evasion Network

The scheme relied on so-called “ruble clearing platforms” that facilitate non-cash mutual settlement for payments tied to sanctioned goods. US-designated Russian financial institutions including Sberbank, Alfa-Bank, Sovcombank, T-Bank, and Bank Tochka were reportedly participants. Treasury identified Russia-based and China-based trading companies acting as counterparties in the network, while also designating Keremet Bank, which Treasury says was purchased specifically to create a new sanctions-evasion hub for Russian import payments and export receipts. Treasury simultaneously re-designated nearly 100 entities under Executive Order 13662, reinforcing risk exposure for any foreign party continuing to work with Russia’s military-industrial base.

China’s Banks Start Saying No

The pressure appears to be working, at least partially. Russian banking sources describe a dramatic slowdown in cross-border payment flows, not only with China but also with Central Asian intermediaries such as Kyrgyzstan and Uzbekistan. A Moscow-based banker quoted by CEPA described the situation bluntly, noting that money has largely stopped flowing and only a narrow set of intermediary countries remain viable, according to CEPA’s analysis of the sanctions squeeze. Chinese banks have reportedly begun refusing payments from Russia and rejecting transactions where Russian names appear anywhere in supporting paperwork — a shift CEPA attributes to a US threat late last year to impose secondary sanctions on Chinese banks, cutting them off from dollar access.

The Scale of China’s Role

China has become indispensable to Russia’s wartime economy. Bilateral trade between the two countries hit a record $237 billion in 2023, up nearly 70% since 2021, and China has supplied more than 90% of Russia’s semiconductor imports since the invasion of Ukraine began, more than half of which were Western-branded or produced, according to CSIS’s research on sanctions and Russia’s economic transformation. China’s imports from Russia rose 60% between 2021 and 2024, according to a Congressional Research Service report.

The Crypto Workaround — And Its Limits

As traditional banking channels tighten, Russian banks are being pushed toward cryptocurrency settlement, though CEPA reports Chinese counterparties treat crypto transactions with Russia as fast but increasingly costly, further raising the effective price of Russian imports. The sanctioned Russian exchange Garantex has been under US sanctions since April 2022, and few jurisdictions remain willing to accept Russian crypto transfers, though Russian bankers reportedly expect the UAE to emerge as a more permissive hub for such flows.

The EU’s Parallel Track

The squeeze is not solely an American project. The European Council voted on June 18–19, 2026, to extend EU economic sanctions against Russia for a further twelve months, through July 2027, while calling for swift adoption of a 21st sanctions package targeting Russia’s shadow fleet, energy revenues, and banking system, according to the Council of the EU’s official statement. For global banks and multinational corporates, the compounding effect of US and EU enforcement means compliance risk tied to any residual Russia exposure — even indirect exposure routed through Chinese or Central Asian intermediaries — is rising sharply heading into the second half of 2026.