These transactions involve gold. This is to further limit the country’s ability use its international reserves due to Vladimir Putin’s invasion in Ukraine. Since 2014, Putin has been increasing his gold stockpile.
These sanctions work in this way:
RUSSIA HAS HOW MUCH GOLD?
After the U.S. placed sanctions against Russia for its invasion of Crimea, Russian gold purchases increased. According to U.S. officials, the country now has $100 billion to 140 million in gold reserves. This is approximately 20 percent of Russia’s total holdings at the Russian Central Bank. The Bank of Russia also announced February 28, just after many Russian banks were removed form the SWIFT banking messaging system, that they would resume buying gold on the domestic precious metals marketplace.
RUSSIA: HOW CAN GOLD BE USED TO EVADE SANCTIONS
As a way of avoiding the sanctions impact, the U.S. claims that Russia has used gold to support their currency. Swapping the gold for a liquid currency that isn’t subject to current sanctions is one way to do this. You could also sell bullion through dealers and gold markets. You could also use the gold to purchase directly from sellers willing to sell you goods or services.
WHAT APPLICATIONS WOULD THE SANCTIONS MAKE?
The U.S. announced that it would block gold transactions along with the Group of Seven and European Union partners, which will also impose the ban on gold reserves. The U.S. Treasury Department has released new guidance that states that Americans, including gold dealers and distributors, wholesalers and buyers, are prohibited from buying, selling, or facilitating gold-related transactions that involve Russia and any of the sanctioned parties.
HOW MUCH IMPACT CAN THIS HAVE ON RUSSIA
Experts say the move will have a further effect on Russia’s ability to launder funds and will result in secondary sanctions being applied to people who trade gold with Russia. Rachel Ziemba is an adjunct senior fellow at The Center for a New American Security. “It’s another way to close sanction loopholes and increase economic pressure upon Russian entities.” It is also intended to stop new financial transactions via other countries who continue to do business in Russia by banning gold transactions.
WHAT OTHER SANCTIONS ARE IMPOSED?
On Thursday, the U.S. took further sanctions. It also sanctioned Russian defense companies, 328 members the Russian State Duma (or state assembly) and the head Russia’s largest financial institution. These actions come on top of financial sanctions and export controls imposed on Putin’s inner circle in the last month.
