Russia’s War on Ukraine: Financial and Trade Sanctions
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Updated February 22, 2023
Russia’s War on Ukraine: Financial and Trade Sanctions
In February 2022, Russia launched a new, expanded war on
Financial Messaging Systems. At the direction of the EU
Ukraine. The United States and allies responded with wide-
and with support from the other G7 countries, the Society
ranging sanctions on Russia that are unprecedented in terms
for Worldwide Interbank Financial Telecommunications
of their comprehensiveness, coordination, and speed. Many
(SWIFT) in 2022 removed several Russian financial
of the sanctions implemented by the Biden Administration
institutions from its system, including the largest bank in
and the 117th Congress target Russia’s financial and trade
Russia (Sberbank). Globally, financial institutions use
relationships with the United States. The 118th Congress
SWIFT to send payment instructions to other banks to
might conduct oversight of these and other sanctions and
process payments; more than 11,000 financial institutions
consider legislation that further shapes U.S. sanctions on
from more than 200 jurisdictions use its services. Removing
Russia.
key Russian financial institutions from SWIFT makes it
difficult for them to process cross-border payments. Some
Financial Sanctions
but not all Russian banks were removed from SWIFT to
The U.S. dollar and financial system are widely used to
allow for continued payments for European imports of
process cross-border transactions, and U.S. financial
Russian natural gas. Russia has substantially reduced
sanctions are a particular source of U.S. economic leverage.
natural gas flows to Europe since the start of the expanded
Since February 2022, financial sanctions have targeted
war.
Russia’s central bank, financial sector, and access to
Russian Financial Institutions. The United States has
international capital.
frozen U.S.-based assets of and imposed restrictions on
Central Bank Reserves. In February 2022, the United
transactions with Russia’s two largest banks, Sberbank and
States, in coordination with the European Union (EU),
VTB, whose assets account for more than half of the
United Kingdom, Canada, and Japan, blocked the Russian
Russian banking system. The United States has also applied
central bank’s access to its holdings of foreign exchange
full blocking sanctions on five other systemically-important
reserves. About $300 billion of Russia’s central bank
financial institutions in Russia (Alfa Bank, Bank Otkritie,
reserves were frozen (Figure 1). The main funds that were
Promsvyazbank, Rosbank, and Sovcombank), and debt and
not frozen were reserves held in China and gold stored in
equity restrictions on three systemically-important financial
central bank vaults.
institutions (Credit Bank of Moscow, Gazprombank, and
Rosselkhozbank). Additionally, the United States
Figure 1. Bank of Russia: Frozen Reserves
sanctioned the Russian Direct Investment Fund (RDIF, a
Russian sovereign wealth Fund) and VEB (a Russian state
development fund), among others. Overall, U.S. sanctions
restrict dealings with 80% of Russian banking sector assets.
In general, the sanctions make it hard, if not impossible, for
Russian financial institutions to process transactions in U.S.
dollars. U.S. allies have imposed similar restrictions on
Russian financial institutions.
International Capital Markets. The Biden Administration
expanded sanctions on Russian sovereign debt (bonds
issued by the Russian government), including prohibiting
Source: CRS using Bank of Russia data for June 2021 (latest
U.S. financial institutions from processing debt payments
available).
from the Russian government to foreign investors. As a
Notes: Russia’s central bank may have real ocated its reserve
result, Russia defaulted on its debt in June 2022. The
holdings between June 2021 and February 2022. These figures should
Administration also banned new investment in Russia.
be viewed as estimates.
Coordinated with allies, these sanctions limit the ability of
Russia’s ability to access financial resources from the
In December 2022, Congress passed legislation to limit the
United States and allies.
usability of the Russian central bank’s gold, by establishing
sanctions on foreign persons who participate in significant
Trade Measures
transactions with Russian gold (P.L. 117-263 §5590).
U.S.-Russia trade flows were relatively low before Russia’s
Congress also passed legislation prohibiting U.S.
expanded war on Ukraine: Russia accounted for less than
transactions with Russia involving International Monetary
1% of U.S. exports and about 1% of U.S. imports in 2021.
Fund (IMF) reserve assets (called special drawing rights
The United States, however, is an important source of
[SDRs]) (P.L. 117-185), a resource that central banks might
technology used in a variety of goods imported by Russia,
utilize during periods of economic stress.
and coordination on trade restrictions with allies amplifies
the significance of these restrictions.
https://crsreports.congress.gov
Russia’s War on Ukraine: Financial and Trade Sanctions
Export Controls. The U.S. Department of Commerce’s
key services that support Russian oil shipments above the
Bureau of Industry and Security (BIS) announced new rules
price cap. The oil price cap intends to limit revenue earned
restricting the transfer of certain U.S.-origin technologies to
by the Russian government from oil exports, while
Russia and Belarus. All exports of controlled electronics,
maintaining continued Russian supply to global markets.
computers, telecommunications, sensors, lasers, and
navigation, avionics, marine, aerospace, and propulsion
Additional Trade & Finance Measures
technologies now require a license (with a few exceptions).
During the 117th Congress, some Members of Congress
BIS is to review applications under a presumption of denial.
introduced bills that would have imposed additional
The new rules also restrict the export of such goods
financial and trade sanctions on Russia. Examples include:
produced in foreign countries using controlled U.S.
prohibiting imports of nickel and copper from Russia
technology. Stricter rules are also in place for restricting
(H.R. 7044);
exports to specified military end users. More than 30
countries have announced or are already implementing
imposing a full trade embargo on Russia (H.R. 6995);
similar controls.
urging suspension of Russia’s membership at the World
Trade Organization (S. 3717, S. 3722);
Export and Import Restrictions. President Biden
prohibited the export to Russia of U.S. dollar-denominated
banning certain Russian investments in U.S. agricultural
bank notes and luxury goods, and has prohibited the import
companies (H.R. 8274);
from Russia of various products, including crude oil and
opposing Russia’s participation and membership in the
petroleum products, coal, nonindustrial diamonds, seafood,
G20, a key forum for economic cooperation (S. 4001);
and alcoholic beverages. In April 2022, Congress passed
prohibiting transactions in any security or related
legislation prohibiting the import of Russian oil and other
derivatives of entities incorporated in Russia (H.R.
energy products (P.L. 117-109). In 2021, approximately
6995);
8% of U.S. imports of fossil fuels came from Russia.
seeking to exclude Russian officials from international
The Administration also banned certain service exports to
economic meetings (H.R. 6891); and
Russia, including accounting, trust and corporate formation,
prohibiting transactions with foreign entities that
management consulting, and quantum computing, among
facilitate digital asset transactions with sanctioned
others. The Administration has further provided broad
Russian entities (S. 3867).
discretion to executive branch agencies to prohibit
In addition to potentially revisiting these measures
additional U.S. exports to and imports from Russia.
proposed in the prior Congress, the 118th Congress could
Revoke PNTR. Congress suspended permanent normal
consider sanctions targeting additional Russian financial
trade relations (PNTR, or most-favored-nation [MFN]) with
institutions and state-owned enterprises, restricting further
Russia’s access to U.S.
Russia and its ally Belarus (P.L. 117-110). Revoking PNTR
-origin technologies, and advocating
for suspension of Russia’s
for Russia increases the average unweighted ad valorem
membership at the international
tariff on Russian imports from approximately 4% to
financial institutions.
approximately 30%. (For more, see CRS In Focus IF12071,
Russia’s Trade Status, Tariffs, and WTO Issues
Select Policy Questions Facing Congress
, by
Cathleen D. Cimino-Isaacs et al.)
As Congress considers the scope and impact of U.S.
sanctions against Russia, it might consider:
What is the economic impact of sanctions on Russia, the
International Companies Withdrawing from Russia
United States, and the global economy?
Since February 2022, more than a thousand U.S. and
To what extent are sanctions an effective policy response
multinational companies have suspended operations in Russia,
to Russia’s war on Ukraine?
left Russia altogether, or terminated transactions with Russia,
How should sanctions interact with other foreign policy
due to concerns about violating new or potential sanctions,
tools?
economic instability in Russia, threat of nationalization or
expropriation, and corporate reputations.
Under what conditions would the United States and allies
lift, tighten, or maintain sanctions?
According to data compiled by researchers at the Yale School
of Management, companies that have withdrawn from Russia
Related Products
and reduced engagement with Russia span a range of sectors.
CRS Insight IN11869, Russia’s War Against Ukraine:
Examples include Apple, EY, FedEx, Formula One, Harley-
Overview of U.S. Sanctions and Other Responses, by
Davidson, H&M, John Deere, Lego, Mastercard, Mattel,
Cory Welt.
McDonald’s, McKinsey, Netflix, Nike, PayPal, PwC, Rol s
CRS In Focus IF12092, The Economic Impact of Russia
Royce, Rolex, Starbucks, TikTok, UPS, Vanguard, and Visa.
Sanctions, by Rebecca M. Nelson.
Some U.S. and other multinational companies continue
operations in Russia.
Rebecca M. Nelson, Coordinator, Specialist in
International Trade and Finance
Oil Price Cap. In December 2022, the United States, in
Christopher A. Casey, Analyst in International Trade and
conjunction with the other G7 countries and Australia,
Finance
imposed a price cap (currently $60/barrel) on seaborne
Andres B. Schwarzenberg, Analyst in International Trade
exports of crude oil from Russia. The sanctions prohibit the
and Finance
provision of shipping, insurance, trade finance, and other
https://crsreports.congress.gov
Russia’s War on Ukraine: Financial and Trade Sanctions
IF12062
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12062 · VERSION 3 · UPDATED
Updated February 22, 2023
Russia’s War on Ukraine: Financial and Trade Sanctions
In February 2022, Russia launched a new, expanded war on
Financial Messaging Systems. At the direction of the EU
Ukraine. The United States and allies responded with wide-
and with support from the other G7 countries, the Society
ranging sanctions on Russia that are unprecedented in terms
for Worldwide Interbank Financial Telecommunications
of their comprehensiveness, coordination, and speed. Many
(SWIFT) in 2022 removed several Russian financial
of the sanctions implemented by the Biden Administration
institutions from its system, including the largest bank in
and the 117th Congress target Russia’s financial and trade
Russia (Sberbank). Globally, financial institutions use
relationships with the United States. The 118th Congress
SWIFT to send payment instructions to other banks to
might conduct oversight of these and other sanctions and
process payments; more than 11,000 financial institutions
consider legislation that further shapes U.S. sanctions on
from more than 200 jurisdictions use its services. Removing
Russia.
key Russian financial institutions from SWIFT makes it
difficult for them to process cross-border payments. Some
Financial Sanctions
but not all Russian banks were removed from SWIFT to
The U.S. dollar and financial system are widely used to
allow for continued payments for European imports of
process cross-border transactions, and U.S. financial
Russian natural gas. Russia has substantially reduced
sanctions are a particular source of U.S. economic leverage.
natural gas flows to Europe since the start of the expanded
Since February 2022, financial sanctions have targeted
war.
Russia’s central bank, financial sector, and access to
Russian Financial Institutions. The United States has
international capital.
frozen U.S.-based assets of and imposed restrictions on
Central Bank Reserves. In February 2022, the United
transactions with Russia’s two largest banks, Sberbank and
States, in coordination with the European Union (EU),
VTB, whose assets account for more than half of the
United Kingdom, Canada, and Japan, blocked the Russian
Russian banking system. The United States has also applied
central bank’s access to its holdings of foreign exchange
full blocking sanctions on five other systemically-important
reserves. About $300 billion of Russia’s central bank
financial institutions in Russia (Alfa Bank, Bank Otkritie,
reserves were frozen (Figure 1). The main funds that were
Promsvyazbank, Rosbank, and Sovcombank), and debt and
not frozen were reserves held in China and gold stored in
equity restrictions on three systemically-important financial
central bank vaults.
institutions (Credit Bank of Moscow, Gazprombank, and
Rosselkhozbank). Additionally, the United States
Figure 1. Bank of Russia: Frozen Reserves
sanctioned the Russian Direct Investment Fund (RDIF, a
Russian sovereign wealth Fund) and VEB (a Russian state
development fund), among others. Overall, U.S. sanctions
restrict dealings with 80% of Russian banking sector assets.
In general, the sanctions make it hard, if not impossible, for
Russian financial institutions to process transactions in U.S.
dollars. U.S. allies have imposed similar restrictions on
Russian financial institutions.
International Capital Markets. The Biden Administration
expanded sanctions on Russian sovereign debt (bonds
issued by the Russian government), including prohibiting
Source: CRS using Bank of Russia data for June 2021 (latest
U.S. financial institutions from processing debt payments
available).
from the Russian government to foreign investors. As a
Notes: Russia’s central bank may have real ocated its reserve
result, Russia defaulted on its debt in June 2022. The
holdings between June 2021 and February 2022. These figures should
Administration also banned new investment in Russia.
be viewed as estimates.
Coordinated with allies, these sanctions limit the ability of
Russia’s ability to access financial resources from the
In December 2022, Congress passed legislation to limit the
United States and allies.
usability of the Russian central bank’s gold, by establishing
sanctions on foreign persons who participate in significant
Trade Measures
transactions with Russian gold (P.L. 117-263 §5590).
U.S.-Russia trade flows were relatively low before Russia’s
Congress also passed legislation prohibiting U.S.
expanded war on Ukraine: Russia accounted for less than
transactions with Russia involving International Monetary
1% of U.S. exports and about 1% of U.S. imports in 2021.
Fund (IMF) reserve assets (called special drawing rights
The United States, however, is an important source of
[SDRs]) (P.L. 117-185), a resource that central banks might
technology used in a variety of goods imported by Russia,
utilize during periods of economic stress.
and coordination on trade restrictions with allies amplifies
the significance of these restrictions.
https://crsreports.congress.gov
Russia’s War on Ukraine: Financial and Trade Sanctions
Export Controls. The U.S. Department of Commerce’s
key services that support Russian oil shipments above the
Bureau of Industry and Security (BIS) announced new rules
price cap. The oil price cap intends to limit revenue earned
restricting the transfer of certain U.S.-origin technologies to
by the Russian government from oil exports, while
Russia and Belarus. All exports of controlled electronics,
maintaining continued Russian supply to global markets.
computers, telecommunications, sensors, lasers, and
navigation, avionics, marine, aerospace, and propulsion
Additional Trade & Finance Measures
technologies now require a license (with a few exceptions).
During the 117th Congress, some Members of Congress
BIS is to review applications under a presumption of denial.
introduced bills that would have imposed additional
The new rules also restrict the export of such goods
financial and trade sanctions on Russia. Examples include:
produced in foreign countries using controlled U.S.
prohibiting imports of nickel and copper from Russia
technology. Stricter rules are also in place for restricting
(H.R. 7044);
exports to specified military end users. More than 30
countries have announced or are already implementing
imposing a full trade embargo on Russia (H.R. 6995);
similar controls.
urging suspension of Russia’s membership at the World
Trade Organization (S. 3717, S. 3722);
Export and Import Restrictions. President Biden
prohibited the export to Russia of U.S. dollar-denominated
banning certain Russian investments in U.S. agricultural
bank notes and luxury goods, and has prohibited the import
companies (H.R. 8274);
from Russia of various products, including crude oil and
opposing Russia’s participation and membership in the
petroleum products, coal, nonindustrial diamonds, seafood,
G20, a key forum for economic cooperation (S. 4001);
and alcoholic beverages. In April 2022, Congress passed
prohibiting transactions in any security or related
legislation prohibiting the import of Russian oil and other
derivatives of entities incorporated in Russia (H.R.
energy products (P.L. 117-109). In 2021, approximately
6995);
8% of U.S. imports of fossil fuels came from Russia.
seeking to exclude Russian officials from international
The Administration also banned certain service exports to
economic meetings (H.R. 6891); and
Russia, including accounting, trust and corporate formation,
prohibiting transactions with foreign entities that
management consulting, and quantum computing, among
facilitate digital asset transactions with sanctioned
others. The Administration has further provided broad
Russian entities (S. 3867).
discretion to executive branch agencies to prohibit
In addition to potentially revisiting these measures
additional U.S. exports to and imports from Russia.
proposed in the prior Congress, the 118th Congress could
Revoke PNTR. Congress suspended permanent normal
consider sanctions targeting additional Russian financial
trade relations (PNTR, or most-favored-nation [MFN]) with
institutions and state-owned enterprises, restricting further
Russia’s access to U.S.
Russia and its ally Belarus (P.L. 117-110). Revoking PNTR
-origin technologies, and advocating
for suspension of Russia’s
for Russia increases the average unweighted ad valorem
membership at the international
tariff on Russian imports from approximately 4% to
financial institutions.
approximately 30%. (For more, see CRS In Focus IF12071,
Russia’s Trade Status, Tariffs, and WTO Issues
Select Policy Questions Facing Congress
, by
Cathleen D. Cimino-Isaacs et al.)
As Congress considers the scope and impact of U.S.
sanctions against Russia, it might consider:
What is the economic impact of sanctions on Russia, the
International Companies Withdrawing from Russia
United States, and the global economy?
Since February 2022, more than a thousand U.S. and
To what extent are sanctions an effective policy response
multinational companies have suspended operations in Russia,
to Russia’s war on Ukraine?
left Russia altogether, or terminated transactions with Russia,
How should sanctions interact with other foreign policy
due to concerns about violating new or potential sanctions,
tools?
economic instability in Russia, threat of nationalization or
expropriation, and corporate reputations.
Under what conditions would the United States and allies
lift, tighten, or maintain sanctions?
According to data compiled by researchers at the Yale School
of Management, companies that have withdrawn from Russia
Related Products
and reduced engagement with Russia span a range of sectors.
CRS Insight IN11869, Russia’s War Against Ukraine:
Examples include Apple, EY, FedEx, Formula One, Harley-
Overview of U.S. Sanctions and Other Responses, by
Davidson, H&M, John Deere, Lego, Mastercard, Mattel,
Cory Welt.
McDonald’s, McKinsey, Netflix, Nike, PayPal, PwC, Rol s
CRS In Focus IF12092, The Economic Impact of Russia
Royce, Rolex, Starbucks, TikTok, UPS, Vanguard, and Visa.
Sanctions, by Rebecca M. Nelson.
Some U.S. and other multinational companies continue
operations in Russia.
Rebecca M. Nelson, Coordinator, Specialist in
International Trade and Finance
Oil Price Cap. In December 2022, the United States, in
Christopher A. Casey, Analyst in International Trade and
conjunction with the other G7 countries and Australia,
Finance
imposed a price cap (currently $60/barrel) on seaborne
Andres B. Schwarzenberg, Analyst in International Trade
exports of crude oil from Russia. The sanctions prohibit the
and Finance
provision of shipping, insurance, trade finance, and other
https://crsreports.congress.gov
Russia’s War on Ukraine: Financial and Trade Sanctions
IF12062
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12062 · VERSION 3 · UPDATED