Russia avoids sanctions, supports rebels in eastern Ukraine using a financial system

TSKHINVALI, South Ossetia - An isolated, war-scarred enclave in the Caucasus Mountains has become a hidden financial crossroads for Russia's shadow empire around the Black Sea.

The Kremlin has for years bankrolled an array of pro-Russian breakaway states within the former Soviet republics of Ukraine, Georgia and Moldova. For Moscow, the goals could not…