US Treasury Prohibits Transactions With Russia's Central Bank, Wealth Fund & Finance Ministry

Despite Moscow repeatedly offering assurances that it has no plans of occupying Ukrainian territory in the course of its ongoing special operation to demilitarise and "denazify" Ukraine, many foreign countries have rushed to accuse it of invading the neighbouring country and violating its territorial integrity, slapping the Kremlin with sanctions.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has prohibited United States citizens from engaging in transactions with Russia’s Central Bank, its National Wealth Fund, and the Ministry of Finance.

“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,” said Secretary of the Treasury Janet L. Yellen.

Yellen added that in coordination with partners and allies, the US was "following through on key commitments to restrict Russia’s access to these valuable resources.”

"This action effectively immobilises any assets of the Central Bank of the Russian Federation held in the United States or by US persons, wherever located," the statement said.

The United States is also sanctioning Kirill Dmitriev, the head of the Russian Direct Investment Fund (RDIF), as part of its sanctions package over Moscow's ongoing special military operation in Ukraine. OFAC singled out three entities perceived as "critical" to managing one of Russia’s key sovereign wealth funds: RDIF, its management company, and one of the managing company’s subsidiaries.

It was underscored that by blocking these entities, the OFAC was "terminating yet another route through which Russia has benefitted from access to the U.S. financial system."

"Our actions demonstrate global support for Ukraine and the commitment to hold Russia’s threatening, authoritarian rulers responsible for their heinous actions," emphasised the official statement.

The U.S. Treasury building is seen in Washington, September 29, 2008.

© REUTERS / Jim Bourg

The United States is seeking to cut Russia's access not only to dollars but to all vital currencies, "essential for the [Russian operation in Ukraine]," stated a senior US administration official on Monday.

Despite newly authorised sanctions, the administration of US President Joe Biden has also issued a general license authorising certain energy-related transactions with Russia until 24 June to mitigate fallout from the sanctions for the US and allies.

"The President made very clear that it was critical that we target our sanctions in a way that would impose costs on Russia, while mitigating those costs on the American people and our allies and partners. The Treasury will also issue a general license authorising certain energy-related transactions by exempting energy-related transactions for preventing unnecessary harm to consumers," said a US administration official.

Russia announced the beginning of a special military operation in Ukraine on 24 February with the goal of defending the Donetsk and Lugansk people's republics from a "genocide" of the Russian-speaking population, which had been targeted by Kiev since the right-wing nationalist government seized power in a coup in 2014.

On 21 February, amid a heightened Ukrainian military buildup near Donbass and reports of numerous violations of the ceasefire by OSCE observers, Russia recognised the Donbass breakaways as independent republics, which, due to continued Ukrainian attacks, on the night of 23 February formally asked Moscow for military assistance.

Russia's President Vladimir Putin has emphasised that the "special military operation" in Ukraine seeks to "demilitarise and denazify" the country.

The US and its allies have responded to the developments by ramping up military assistance to Ukraine and heavily sanctioning Russian government officials, banks and businessmen, while ruling out direct military involvement in Ukraine.

Moscow has stated that when it took the difficult decision to launch the special operation, it had been prepared to face a broad plethora of sanctions from the West. Russian authorities said they had prepared a plan of action in advance and would provide all necessary support to businesses that fell under the restrictions, ensuring the smooth operation of the economy.