Russia could turn to investment advisors to evade sanctions, prompting more US scrutiny into the industry, Treasury Department says

• Russian billionaires could turn to investment advisors to evade western sanctions.
• Such a move would prompt stronger rules and oversight from the Treasury Department.

Russia's high society could turn to investment advisors as potential avenue to avoid western sanctions, the Wall Street Journal first reported.

The move has caught the eye of the US Treasury Department which says engagement within the sector is needed to determine if more oversight and rules are warranted. More regulations would "prevent sanction evaders from exploiting financial loopholes to hide and move their wealth," according to Brian Nelson, Treasury undersecretary for terrorism and financial intelligence.

Russia's wealthiest billionaires and oligarchs are feeling the pressure of western sanctions after the invasion of Ukraine sparked mass condemnation from global powers. Most of the sanctions have taken aim at the country's oil industry, and has pushed the European Union to go as far as to push Russia out of SWIFT, the international payment system used by most banks.

Investment advisors are an attractive option to avoid sanctions and other financial penalties because hedge funds and private equity aren't subject to stringent anti-terrorism or money laundering measures, according to the Treasury's National Money Laundering Risk Assessment.

The oversight is instead largely done individually and at-will, thus leading to inconsistencies between institutions. Nelson added that the Treasury has provided additional details on its website to aid the private sector in educating itself toward the inner workings of US sanctions.