Treasury Sanctions Programs Face Broad Review From Biden Team

President-elect Joe Biden’s national security team plans to conduct a top-to-bottom review of sanctions operations at the U.S. Treasury Department, including an evaluation of current programs, staffing and budgets, according to people familiar with the matter.

Adewale “Wally” Adeyemo, chosen by Biden as the No. 2 official at Treasury, will coordinate with other national security agencies to review how the Terrorism and Financial Intelligence unit, or TFI, at Treasury operates, the people said.

Adeyemo, who served as deputy national security adviser for international economics in the Obama administration, would work under Janet Yellen, Biden’s choice for Treasury secretary. Both must first be confirmed by the Senate, and the people described the plans on condition of anonymity because the new administration is still coming together.

Under President Donald Trump, the U.S. has imposed a wide range of sanctions on companies, individuals and even oil tankers tied to Iran, North Korea, China, Venezuela and Russia -- often unilaterally. The incoming Biden administration sees Trump’s approach as confusing to allies and adversaries, according to the people. Sanctions are seen as most effective when implemented multilaterally, they said.

Yet Biden’s team so far is signaling there won’t be much of a letup. While the president-elect has been wary to say which of Trump’s sanctions he’ll keep, his picks for top administration jobs have made clear that economic restrictions will remain an essential tool.

“We must also remain laser-focused on the Treasury Department’s critical role protecting our national security,” Adeyemo, 39, said when he was introduced by Biden to the public on Dec. 1. “This includes using our sanctions regime to hold bad actors accountable.”

A Biden transition spokesperson referred to Adeyemo’s Dec. 1 remarks in response to a request for comment.

Adeyemo was born in Nigeria and emigrated with his family to California as a child. He worked as a senior adviser then-Treasury secretary Jacob J. Lew during the Obama administration, and went on to serve several roles in the White House, including on as deputy national security adviser.

If confirmed, he would be the most senior ranking Black person in the Treasury Department’s history.

Biden named Jake Sullivan as his national security adviser, and Antony Blinken to head the State Department, but has not yet named his choices for other key positions, such as the undersecretary that oversees TFI at Treasury.

The sanctions unit has had no undersecretary since Sigal Mandelker stepped down in October 2019. It has been managed by Treasury Secretary Steven Mnuchin’s deputy secretary, Justin Muzinich, who serves both as acting head of TFI and of another key unit, Domestic Finance.

A number of civil servants have left the sanctions unit during Trump’s tenure, even as the use of the economic measures have increased in sheer volume and sophistication. Adeyemo plans to address staffing issues and consider increasing the unit’s budget, the people said.

The Biden team also is concerned about threats to the financial system from fraud and other crisis-related vulnerabilities, the people familiar with the transition team’s thinking said. The incoming administration wants to “stay vigilant” to protect it, particularly during the current economic crisis, they said.

Mnuchin has aired similar concerns, though they were more about the potential impact of sanctions on the supremacy of the U.S. dollar and the over-use of sanctions.

In almost four years as secretary, Mnuchin has spent about half his time managing his agency’s sanctions portfolio, at least until the global pandemic threw the U.S. economy into crisis. Yet over the past 18 months, even Mnuchin’s appetite for increasingly relying on economic aggression to punish adversaries was waning.

He began to stand in the way of tough measures, including against Venezuela, China and Russia, worried that an over-reliance on sanctions could weaken the global primacy of the dollar, according to Trump’s former national security adviser, John Bolton.

In his book “The Room Where It Happened,” released in June, Bolton wrote about Mnuchin expressing his fears that other nations would stop using dollars and that the stress on the global financial system would be too great.

Mnuchin later disputed Bolton’s account.

©2020 Bloomberg L.P.

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