The latest round of sanctions imposed on Russia by the United States for its early morning invasion of Ukraine was outlined Thursday by the Treasury Department – which now cover the top 10 Russian financial institutions.
According to Treasury, its Office of Foreign Assets Control (OFAC) imposed “expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system — including all of Russia’s largest financial institutions and the ability of state-owned and private entities to raise capital.” The Treasury said the actions further bar Russia from the global financial system.
“The actions also target nearly 80% of all banking assets in Russia and will have a deep and long-lasting effect on the Russian economy and financial system,” Treasury said.
More specifically, Treasury said its actions:
Target Russia’s two largest financial institutions – Specifically, Public Joint Stock Company Sberbank of Russia (Sberbank)and VTB Bank Public Joint Stock Company (VTB Bank), which Treasury asserted, combined, make up more than half of the total banking system in Russia by asset value. The agency said the actions drastically alter the banks’ fundamental ability to process payments through the U.S. financial system. “The Russian financial institutions subject to today’s action can no longer benefit from the remarkable reach, efficiency, and security of the U.S. financial system,” Treasury said. To illustrate the size of Russian transactions, Treasury said that, daily, Russian financial institutions conduct about $46 billion worth of foreign exchange transactions globally, 80% of which are in U.S. dollars.
Block other major Russian financial institutions – OFAC has also imposed blocking sanctions on three more major Russian financial institutions: Otkritie, Novikom, and Sovcom. Treasury said the trio “play significant roles in the Russian economy, holding combined assets worth $80 billion.” The designations, the agency asserted, “further restrict the Russian financial services sector and greatly diminish the ability of other critical Russian economic sectors from accessing global markets, attracting investment, and utilizing the U.S. dollar.”
However, Treasury said OFAC has issued several “general licenses” to “ensure that these sanctions and prohibitions have an impact on the intended targets and to minimize unintended consequences on third parties.” Treasury noted that the “sanctions and license package has been constructed to account for the challenges high energy prices pose to average citizens and doesn’t prevent banks from processing payments for them.”
Target Russian elites – Treasury said influential Russians in Putin’s inner circle and in elite positions of power within the Russian state are targeted. “Many of these individuals are believed to participate in, or benefit from, the Russian regime’s kleptocracy, along with their family members. Many serve in leadership roles of companies designated or identified today,” Treasury said.