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Abu Dhabi, UAE (CNN)As the Ukraine war approaches the one-year mark, the United States is ramping up efforts to choke off Russia's economy and it has set its sight on the Middle East.
A top US Treasury official arrived in the United Arab Emirates (UAE) on Monday to warn the regional business hub that helping Moscow evade sanctions wouldn't be without consequences.
Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, met with senior government officials from several UAE ministries, where he discussed "rooting out evasion of US sanctions, particularly on Russia and Iran," as well as the US' "commitment to take additional actions against those evading or facilitating the evasion of sanctions," according to a statement.
The US Treasury earlier warned that "individuals and institutions operating in permissive jurisdictions," including in the UAE and Turkey, risk losing access to G7 markets for doing business with sanctioned entities or not conducting appropriate due diligence against illicit finance.
G7 countries include Canada, France, Germany, Italy, Japan, the UK and the US.
The Gulf state has walked a tightrope between Washington and Moscow since the start of the Ukraine war last February, opting to remain neutral as it sees the world order moving toward multi polarity.
The US has repeatedly called on its Middle Eastern allies to support its efforts in slowing the Russian war machine, but a public threat of consequences against a close ally like the UAE is rare.
"What we're seeing now is a bit more about messaging to the region and indicating the seriousness of these sanctions," said Justine Walker, global head of sanctions, compliance and risk at the Association of Certified Anti-Money Laundering Specialists (ACAMS). The US is trying to say, "If you are going to do business with Russia, then you do business with Russia but you don't do business with us," she told CNN.
Since the war, the UAE has become the top Arab destination for Russian investors, with the Gulf state's real estate market surging as Russians flock into Dubai and Abu Dhabi.
The US has previously sanctioned entities and individuals in the UAE for sanctions evasion. More recently, it sanctioned two UAE-based air transportation firms for collaborating with a sanctioned Iranian firm to transport Iranian UAVs (unmanned aerial vehicles), personnel, and related equipment from Iran to Russia.
A Friday statement published on the UAE state news agency WAM said that, during the visit, US and UAE officials discussed enhancing cooperation with regards to "ongoing sanctions programmes and associated designations of key networks around the world."
The two sides also discussed combating money laundering and the financing of terrorism both locally and internationally, added the statement.
Russia is already under a barrage of sanctions from the US, along with the UK and the European Union. But most of those are primary sanctions, which only apply within the territory of the sanctioning country.
For instance, if a Russian bank is under primary US sanctions, it cannot operate in a US market. The bank can still, however, work with a UAE or Turkish bank.
Sanctioned countries often stay afloat by finding loopholes to conduct business outside the US. Washington plugs that loophole by imposing secondary sanctions, which punish parties conducting commercial activities with the sanctioned entities -- even when the activity takes place outside US territory.
Such sanctions force countries and entities to choose between the sanctioned nation or the US, but not both.
A senior US official told CNN that the US "will continue to use our authorities and all tools at our disposal to crack down on sanctions evasion that supports Putin's war machine."
Asked if the US is effectively imposing secondary sanctions on Russia by asking the UAE to crack down on business with the country, the official said "no."
The US sees Russia circumventing sanctions by moving trade through the Middle East, as well as trading directly with the region, said Walker.
As the US dominates the global economy, secondary sanctions have often been effective in causing economic damage to the sanctioned country. But Walker sees their imposition in this case as unlikely, noting that it would be "serious diplomatic escalation in tensions" between the UAE and the US.