According to Reuters, the Biden administration is preparing sanctions against Russia that would include prohibiting U.S. financial institutions from processing transactions from Russia’s largest banks if Russia invades Ukraine.
If Russia invades Ukraine, the sanctions would be implemented immediately (Feb. 22).
The measures would have a negative impact on the Russian economy by terminating the “correspondent” banking links that existed between the banks of the two countries.
Authorities have stated that the limits will be included in the penalties, despite the idea of cutting down on banking relationships that had not previously been mentioned in the media.
According to anonymous sources, among the banks that may be targeted include VTB Bank, Sberbank, VEB, and Gazprombank, among others.
The United States could also place some Russian individuals and businesses on the Specially Designated Nationals (SDN) list,
which would effectively remove them from the United States’ banking system entirely by prohibiting their trade with Americans and freezing their assets in the country, among other measures.
However, even though the correspondent banking tool would be less powerful than the SDN designation,
according to Reuters, banks could still be adversely affected if it becomes more difficult for them to deal in U.S. dollars, which is the global reserve currency and in which the vast majority of global trade is transacted.
In light of the fact that a significant portion of global trade transactions is conducted in dollars, “this is a sanction with teeth,”
according to Washington lawyer Kay Georgi, an expert in international trade.
“However, it is not the more complicated and deadly sanction of being placed on the SDN list and having all assets in the United States or in the hands of U.S. persons frozen,” she added.
An earlier report in February stated that the tensions between Russia and Ukraine could result in a Soviet cyber strike on the Ukrainian infrastructure.
As of early February, there were approximately 100,000 Russian troops stationed along the border, and European officials were concerned about the consequences of an invasion.
There has been heightened vigilance at the European Central Bank in anticipation of cyber threats.
The authority has been investigating scams as a result of the increased risk associated with COVID, and the Ukraine situation has focused the agency’s attention specifically on Russian threats.
As a result of the potential concerns, banks are preparing cyber tests to ensure that they are prepared to defend against an assault.