The US imposes “toughest” sanctions on Sberbank and Alfa-Bank

The US has imposed its toughest sanctions on Sberbank, Russia’s largest financial institution, and Alfa-Bank, the country’s largest private bank, in response to increasing its economic punishment of Moscow atrocities committed by Russian forces in Ukraine.

Wednesday’s announcement of “full lockdown sanctions” barring lenders from doing business with US institutions or individuals came after senior US officials, including President Joe Biden, warned this week that they plan to impose tougher lockdowns on Russia to impose restrictions.

A senior US official said the latest measures came in response to “the sickening brutality in Bucha,” a town near the capital Kyiv, where gruesome images of the bodies of Ukrainian civilians have surfaced in recent days, suggesting a possible death indicated massacres by Russian soldiers.

The US also imposed sanctions on Vladimir Putin’s two adult daughters, Ekaterina Tikhonova and Maria Vorontsova, the wife and daughter of Foreign Minister Sergei Lavrov, and members of Russia’s Security Council, including former President Dmitry Medvedev and Prime Minister Mikhail Mishustin.

In addition, the US announced that on Thursday it would ban all new investments in Russia by America and announce new blocking sanctions against large Russian state-owned companies.

The new restrictions on Sberbank and Alfa mean that the two Russian lenders are no longer able to do business with US institutions or individuals in any currency. Immediately after the invasion, the US had banned any debt or equity transactions with Alfa and Sberbank, but they are now imposing “full lockdown sanctions” that include much stricter restrictions.

“This is the strictest measure we can take in terms of financial action,” the US official said. “And in practice, the history of sanctions is when we impose full lockdown sanctions [a] Financial institution, the rest of the world, even in other jurisdictions that haven’t imposed a full lockdown yet, they respect the regime. So there tends to be a multiplier effect.”

The official added that the US and EU decided to target Putin’s daughters because they believed they would help protect the Russian president’s wealth.

“We believe that many of Putin’s fortunes are hidden with family members and therefore we target them,” he added.

The British government also announced additional sanctions against Putin’s regime on Wednesday, including a complete asset freeze against Sberbank.

The measures, which Secretary of State Liz Truss called “the toughest sanctions yet,” included a ban on imports of Russian iron and steel products and an outright ban on new foreign investment in Russia.

The UK also imposed sanctions on another eight people linked to key Russian industries, including Andrey Akimov, CEO of Gazprombank, and Novatek founder and CEO Leonid Mikhelson.

US and European allies had hoped for a powerful eruption sanctions imposed in the wake of the Russian invasion in late February – including cutting off Moscow’s access to its foreign exchange reserves by banning transactions with its central bank – would be enough to financially isolate Russia without undue impact on the rest of the world economy.

But they have been forced to consider other targets as the conflict unfolded, expanding their network to include companies and individuals in third countries that continue to do business with Russian companies and tightening their enforcement of existing sanctions.

Edward Fishman, a former sanctions chief for Russia and Europe at the State Department, called Wednesday’s measures “the most significant sanctions since [Russian] Central Bank Sanctions” imposed at the end of February.

“We are heading for Iran-style sanctions,” he added, citing decades of anti-Tehran measures that began in 1979. “This is an assembly line and it only goes in one direction.” The US imposes “toughest” sanctions on Sberbank and Alfa-Bank

Adam Bradshaw

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