- The US Treasury's power to unleash secondary sanctions has been expanded.
- Now, more foreign institutions are at risk of sanctions if they're engaged with Russia's economy.
- The Kremlin is '"desperate for access to the outside world," Janet Yellen said.
Foreign financial institutions engaged in Russia's wartime economy are now at greater risk of secondary sanctions, as the Treasury Department's ability to blacklist institutions just got a boost.
The update, announced Wednesday, also unveiled fresh sanctions against 300 individuals and entities accused of fueling Moscow's war in Ukraine and helping it circumvent sanctions.
"Russia's war economy is deeply isolated from the international financial system, leaving the Kremlin's military desperate for access to the outside world," said Treasury Secretary Janet Yellen said, quoted in the report. "Today's actions strike at their remaining avenues for international materials and equipment, including their reliance on critical supplies from third countries."
After the department was first granted sanctioning power in December, foreign lenders have come into compliance with US rules, fearing that they would lose dollar access. That included banks in Turkey, the United Arab Emirates, and Austria.
Meanwhile, financial trades between Russia and China — a key wartime partner — have been disrupted by the Treasury's actions, as Chinese entities hope to avoid US restrictions. In some cases, firms in China have halted yuan transactions with Russia altogether.
The new announcement comes as Russia's wartime activity has kept its economy afloat while its partnership with China has only grown. Under the Treasury's expanded power, secondary sanctions can now be applied to many more institutions.
Previously, the only at-risk lenders were those dealing with any of the 1,200 entities tied to Russia's defense sector, The Financial Times reported. With this week's change, that number has climbed to 4,500, encompassing virtually any sanctioned Russian firm.
A handful of Chinese companies were also singled out.
A handful of stock exchanges in Moscow are also restricted, meant to prevent investors from profiting from Russia's war through defense firms and other corporations.
The announcement comes ahead of a Group of Seven meeting, during which the US and its allies will discuss how best to financially support Ukraine.
In recent weeks, that's included discussions about unlocking the interest and profits earned on Russia's frozen reserves, which could give Kyiv over $3 billion a year. Moscow has promised to retaliate if its assets are used by the West.