Biden administration expands sanctions against Russia, cutting off U.S. transactions with central bank

Russian President Vladimir Putin attends a meeting with judges of Russia’s arbitration courts and courts of general jurisdiction via teleconference call at the Novo-Ogaryovo state residence, outside Moscow, on February 9, 2022.

The new sanctions against Russia's central bank were announced on Monday by the Biden administration, which effectively prohibits Americans from doing business with the bank.

The National Wealth Fund of the Russian Federation and the Ministry of Finance will be targeted by the new measures.

The new sanctions will take effect immediately, according to a senior Biden administration official who spoke on the condition of anonymity.

We wanted to put these actions in place before our markets open because we learned over the weekend that the Russian Central Bank was trying to move assets and there would be a great deal of asset flight from institutions.

Our strategy is to make sure that the Russian economy goes backwards. The official said that as long as President Putin goes ahead with his invasion of Ukraine, then so be it.

Kirill Dmitriev, an ally of Russian President Vladimir Putin, is being added to the sanctions list by the U.S. The Russian Direct Investment Fund is considered a slush fund for Putin.

The official said that the U.S. expects its allies to follow suit.

The U.S. and its allies announced over the weekend that they will impose restrictions on Russia's central bank in order to prevent it from using its international reserves in ways that may undermine sanctions.

A second senior administration official said Monday that no country is sanctions proof and that Putin's war chest of $630 billion in reserves only matters if he can use it to defend his currency.

On Saturday, the U.S., European allies and Canada agreed to remove key Russian banks from the interbank messaging system, SWIFT, an extraordinary step that will sever the country from much of the global financial system.

Russian banks won't be able to communicate securely with banks beyond its borders because of Moscow's exclusion from the Society for Worldwide Interbank Financial Telecommunication. Iran was removed from the international money transfer network in the wake of Tehran's nuclear program.

The leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada and the U.S. plan to limit the sale of golden passports. The golden passports are a loophole that allows wealthy Russians connected to the Kremlin to become citizens in other countries and access certain financial systems.

The U.S., the United Kingdom and the European Union imposed sanctions against Russian President Vladimir Putin and Russian Foreign Minister Sergey Lavrov.

In the weeks leading up to the invasion, President Joe Biden threatened sanctions in order to deter Putin from further aggression.