Ben Aris writes from Moscos:  Five of Russia’s six largest banks are now on the US sanctions list, which is hurting the whole sector and could eventually precipitate another financial crisis.

Russia’s largest lender, the savings bank Sberbank, was included in a new sanctions list for the first time in September. It joins its sister state-owned banks VTB, which concentrates on corporate financing; the retail specialist VTB24; Gazprom-owned Gazprombank; Bank Moskvy, which was acquired from the City of Moscow in 2011 by the VTB Group; and Russian Agriculture Bank (Rosselkhozbank), which finances the agricultural sector.

Sanctions are being imposed an already extremely sick sector and will only add to the deterioration. Cut off from international capital markets and an economic malaise at home depressing retail deposit growth, the sector is currently being supported by the Central Bank of Russia (CBR). Lending by the CBR is approaching levels last seen during the blackest days of the 2008-09 crisis. The government has already been forced to recapitalise two state-owned banks – VTB and Russian Agriculture Bank – and is pouring more money into the sector.

A recent report from Standard & Poor’s says that Russian banks have sufficient resources to weather the storm for now. “We believe that the credit quality of Russian banks will not suffer immediately from the restrictions on tapping EU and capital markets. Our analysis suggests the sector has enough liquidity to refinance its international debt falling due until the end of 2015,” the rating agency says in a September 18 report entitled, “Sanctions Will Increasingly Weigh On Russian Banks’ Funding And Liquidity Profiles.”

However, it adds that, “the longer restrictions on capital market access last, the larger funding imbalances will become, potentially calling into question the banks’ capacity to adequately finance the economy.”

While the list of sanctioned banks is short, they still represent more than half of all Russia’s banking assets. Luckily, following the 2008 crisis Russian banks became a lot more cautious in their borrowing and are not heavily exposed to international lenders. S&P estimate that banks total external obligations for the 2014-15 is $57bn, which they should be able to cover from their liquid reserves and maybe with some help from the CBR.

A Chinese senior prosecutor has pledged efforts to chase fugitive corruption suspects as well as to “resolutely cut off the escape route of suspects.”

At a conference on an international manhunt of duty-related crime suspects on Saturday, Qiu Xueqiang, deputy procurator-general of the Supreme People’s Procuratorate (SPP), urged prosecutors to intensify their work to prevent relevant suspects from escaping.

Such efforts include proper risk evaluation of the targets’ fleeing and early warning against such situations, Qiu said.  Prosecutors should enhance the information sharing with other authorities and formulate detailed plans to prevent suspects’ absconding.  Qiu told the prosecutors to target on suspects both in China and abroad and they should take measures to chase the suspects at large and at the same time stop potential fugitives.

The SPP announced the launch of a half-year campaign targeting fugitive suspects of corruption and other duty-related crimes. On Saturday, Chinese police announced that it has seized 102 suspects in a separate campaign targeting corrupt officials and suspects in economic crimes that have fled abroad.

In a latest move, Chinese police escorted four suspects captured in Thailand to Beijing.  One of the four was suspected of loan fraud and has been at large for 10 years. The other three were suspected of contract frauds with one case involved money up to 67 million yuan (10.9 million U.S. dollars), the Ministry of Public Security (MPS) said in a statement.

It was also the fourth time Chinese police conducted arrests in Thailand amid the police’s recent manhunt campaign and to date a total of 16 suspects of major economic crimes in the country have been seized and brought back to China.

China launched the Fox Hunt 2014 operation in July to “block the last route of retreat” for corrupt officials and other economic criminals at a time when China’s major crackdown on graft has already narrowed the space for abuse of power.

Meng Qingfeng, director of the economic crime investigation bureau of the MPS said the international pursuit is an important step of China to crack down on graft and to promote the rule of law.  Meng said Chinese police will continue the efforts to deepen international cooperation of law enforcement and diligently practice its duty to fight crimes and protect the people.

Jamie Dettmer writes:  Turkey needs to stem money laundering and to stop traders in Turkey buying smuggled oil from the Islamic State.

For years, Ankara has fallen foul of international money-laundering agreements, and despite passing a law last year aimed at preventing the financing of terrorism, Turkey remains on a global list of uncooperative countries. It languishes on what is known as the gray list overseen by the Financial Action Task Force, an inter-governmental body.

The G7-founded body, which is tasked with implementing global standards to counter illicit financing, says Turkey has a weak framework for identifying and freezing terrorist assets. With the U.S. gunning for ISIS and determined to hit its funding, Turkey will be pushed to play its part on hitting the militants in their wallets.

From racking in millions in ransom money for Western hostages to trafficking in rare antiquities looted from museums and archaeological sites in Syria and Iraq, militants of ISIS have turned their jihad into a cash cow and become terror tycoons. Analysts say they are the world’s first self-funding terrorist organization and, unlike al Qaeda, don’t need to go cap-in-hand to wealthy sympathizers in the Gulf—although they don’t say “no” when offered donations.

Depriving ISIS of its oil revenue is going to be a monumental task. Hitting a dozen rudimentary refineries isn’t going to undercut the group, according to analysts.

Even more than bombing, a key component in stopping ISIS from profiting from oil will be blocking militants from getting their oil to market by locking up the border with Turkey and Jordan and pressing Kurds to stop dealers in semi-autonomous Kurdistan from trading. The Turks have shown little enthusiasm for halting the trafficking in the past, although in recent weeks they have interdicted some tankers carrying illicit oil.

Western and Iraqi officials were given a good rundown on where the militants’ wealth comes from when ISIS computers and databases were seized by Iraqi intelligence officers from the Mosul home of an ISIS courier, Abdulrahman al-Bilawi, a few days before jihadists overran the northwestern Iraqi city. The breakdown of the group’s financial resources shocked even senior Iraqi officials and it suggested ISIS was worth more than $800 million even before it added loot pillaged in Mosul to its coffers.

The databases revealed ISIS is receiving cash not only from oil trafficking but also from selling to overseas traders, other Syrian insurgent groups and even the Assad regime. It is also reaping profits from selling industrial machinery from plants and factories pillaged in Aleppo, priceless antiquities stolen from archaeological sites and museums, and cars and weapons captured from the Syrian army.

ISIS leaders on the ground prioritize quickly what is to be looted when they capture new territory, and there is strict management of resources.