Russia-Ukraine relations refer to the bilateral ties between the Russian Federation and Ukraine. Following the Ukrainian Revolution of Dignity in 2014, Ukraine's Crimean Peninsula was occupied by unmarked Russian forces, later being annexed by Russia, while pro-Russia separatists simultaneously engaged the Ukrainian military in an armed conflict for control over eastern Ukraine; these events marked the beginning of the ongoing Russo-Ukrainian War. In a major escalation of the conflict on 24 February 2022, Russia launched a full-scale invasion of the Ukrainian mainland across a broad front. Ukraine severed all formal diplomatic ties with Russia on the day of the 2022 Russian invasion.Press releaseU.S. Treasury Announces Unprecedented & Expansive Sanctions Against Russia, Imposing Swift and Severe Economic CostsFebruary 24, 2022United States Acts in Tandem with Partners and Allies to Maximize Consequences for Russia, and in Show of Unity Against Invasion of a Sovereign StateTop Ten Russian Financial Institutions Now Under U.S Restrictions; U.S. Ready to Impose Additional Major CostsWASHINGTON - The United States took significant and unprecedented action to respond to Russia's further invasion of Ukraine by imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system. The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today imposed expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system ? including all of Russia's largest financial institutions and the ability of state-owned and private entities to raise capital ? and further bars Russia from the global financial system. The actions also target nearly 80 percent of all banking assets in Russia and will have a deep and long-lasting effect on the Russian economy and financial system.Building off of President Biden's initial sanctions announcement this week, today Treasury is taking action against Russia's top financial institutions, including sanctioning by far Russia's two largest banks and almost 90 financial institution subsidiaries around the world. Treasury is also sanctioning additional Russian elites and their family members and imposing additional new prohibitions related to new debt and equity of major Russian state-owned enterprises and large privately owned financial institutions. This will fundamentally imperil Russia's ability to raise capital key to its acts of aggression. These actions are specifically designed to impose immediate costs and disrupt and degrade future economic activity, isolate Russiafrom international finance and commerce, and degrade the Kremlin's future ability to project power."Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity," said Secretary of the Treasury Janet L. Yellen. "Our actions, taken in coordination with partners and allies, will degrade Russia's ability to project power and threaten the peace and stability of Europe. We are united in our efforts to hold Russia accountable for its further invasion of Ukraine while mitigating impacts to Americans and our partners. If necessary, we are prepared to impose further costs on Russia in response to its egregious actions."Russia's large financial services sector is heavily dominated by state-owned actors that rely on the U.S. financial system to conduct their business activities both within Russia and internationally. The sanctions the United States is imposing today cut off major parts of the Russian financial system and economy from access to this important financial infrastructure and the U.S. dollar more broadly.The United States consulted closely with partners to tailor the economic costs of these actions to weigh most heavily on the Government of the Russian Federation (GoR) and its economy while mitigating impacts to America and its allies. Treasury's sustained financial diplomacy over several months, on a near daily basis with partners and allies and at every level, has strengthened a unity of purpose, resolve, and technical coordination to deliver a broad array of impactful measures that will be felt deeply in Russia.Today's actions were taken pursuant to Executive Order (E.O.) 14024, which authorizes sanctions against Russia for its harmful foreign activities, including violating core principles of international law such as respect for the territorial integrity of sovereign states.MAJOR ECONOMIC ACTIONSTargeting Russia's Two Largest Financial InstitutionsTreasury is taking unprecedented action against Russia's two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank)and VTB Bank Public Joint Stock Company (VTB Bank), drastically altering their fundamentalability to operate. On a daily basis, Russian financial institutions conduct about $46 billion worth of foreign exchange transactions globally, 80 percent of which are in U.S. dollars. The vast majority of those transactions will now be disrupted. By cutting off Russia's two largest banks ? which combined make up more than half of the total banking system in Russia by asset value ? from processing payments through the U.S. financial system. The Russian financial institutions subject to today's action can no longer benefit from the remarkable reach, efficiency, and security of the U.S. financial system.Correspondent and Payable-Through Account Sanctions on SberbankToday Treasury is imposing correspondent and payable-through account sanctions on Sberbank. Sberbank is uniquely important to the Russian economy, holding about a third of all bank assets in Russia. Sberbank is the largest financial institution in Russia and is majority-owned by the GoR. It holds the largest market share of savings deposits in the country, is the main creditor of the Russian economy, and is deemed by the GoR to be a systemically important financial institution. Within 30 days, OFAC is requiring all U.S. financial institutions to close any Sberbank correspondent or payable-through accounts and to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries. Payments that Sberbank attempts to process in U.S. dollars for its clients ? with examples ranging from to technology to transportation ? will be disrupted and rejected once the payment hits a U.S. financial institution.To implement sanctions on Sberbank, OFAC issued Directive 2 under E.O. 14024, "Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions" (the "Russia-related CAPTA Directive"). This directive prohibits U.S. financial institutions from: (i) the opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property; and (ii) the processing of transactions involving any such entities determined to be subject to the Russia-related CAPTA Directive, or their property or interests in property. Accordingly, U.S. financial institutions must reject such transactions unless exempt or authorized by OFAC.Pursuant to Directive 2 under E.O. 14024, Sberbank and 25 Sberbank foreign financial institution subsidiaries that are 50 percent or more owned, directly or indirectly, by Sberbank were identified in Annex 1 to the Russia-related CAPTA Directive. These subsidiaries include banks, trusts, insurance companies, and other financial companies located in Russia and six other countries.Sberbank and other affiliated entities determined to be subject to the Russia-related CAPTA Directive have been added to OFAC's List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), a reference tool that provides actual notice of OFAC actions with respect to foreign financial institutions for which the opening or maintaining of a correspondent account or a payable-through account in the United States is prohibited or subject to one or more strict conditions. All foreign financial institutions owned 50 percent or more, directly or indirectly, by Sberbank are covered by the prohibitions of the Russia-related CAPTA Directive, even if not identified on OFAC's CAPTA List.The prohibitions of the Russia-related CAPTA Directive take effect beginning at 12:01 a.m. eastern daylight time on March 26, 2022. Accordingly, by 12:01 a.m. eastern daylight time on March 26, 2022, U.S. financial institutions must have closed any correspondent or payable-through account maintained for Sberbank all other entities listed in Annex 1 to the Russia-related CAPTA Directive, and all foreign financial institutions owned 50 percent or more by the foregoing. In addition, after 12:01 a.m. eastern daylight time on March 26, 2022, U.S. financial institutions may not process transactions involving those institutions and must reject such transactions, unless exempt or authorized by OFAC.Full Blocking Sanctions on VTBOFAC has imposed full blocking sanctions on VTB Bank, Russia's second-largest financial institution, which holds nearly 20 percent of banking assets in Russia. VTB Bank is majority-owned by the GoR, which deems it to be a systemically important financial institution. This will sever a critical artery of Russia's financial system. By imposing these sanctions, assets held in U.S. financial institutions will be instantly frozen and inaccessible to the Kremlin. This is one of the largest financial institutions Treasury has ever blocked and sends an unmistakable signal that the United States is following through on its promise of delivering severe economic costs.VTB Bank was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the GoR, and for operating or having operated in the financial services sector of the Russian Federation economy. In addition, 20 VTB Bank subsidiaries were designated pursuant to E.O. 14024 for being owned or controlled by, directly or indirectly, VTB Bank. These subsidiaries include banks, holding companies, and other financial companies located in Russia and eight other countries. All entities owned 50 percent or more, directly or indirectly, by VTB Bank are subject to blocking, even if not identified by OFAC.

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