Sanctions against Russia
21 Commons Library Research Briefing, 22 March 2023
Restrictions on the Russian Central Bank
In the face of Russia's ongoing military action in Ukraine, the EU, UK, US and
Canada issued a joint statement on 26 February which set out their
commitment to impose further restrictive measures on Russia.
In addition to removing selected Russian banks from SWIFT, allies also
committed to restrict the activities of the Russian Central Bank so as to
prevent it from accessing its foreign reserves as a way of negating the impact
of Western sanctions.
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On the sanctioning of the Russian Central Bank, the Treasury stated:
This action is taken in concert with the US and the European Union, to prevent
the CBR from deploying its foreign reserves in ways that undermine the impact
of sanctions imposed by us and our allies, and to undercut its ability to engage
in foreign exchange transactions to support the Russian rouble.
The UK Government will immediately take all necessary steps to bring into
effect restrictions to prohibit any UK natural or legal persons from undertaking
financial transactions involving the CBR, the Russian National Wealth Fund,
and the Ministry of Finance of the Russian Federation. The UK Government
intends to make further related designations this week, working alongside our
international partners.
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The legislation prohibiting financial services relating to foreign reserves
exchange and asset management by the Russian Central Bank is set out in the
Russia (Sanctions) (EU exit) (Amendment) (No.5) Regulations 2022.
Further sanctions on financial institutions
In line with the US and EU (see below), the Foreign Office announced on 1
March, sanctions targeting the Russian Direct Investment Fund, a state-
owned sovereign wealth fund that the US has referred to as "a known slush
fund for President Putin and his inner circle".
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The Fund's CEO, Kirill Dmitriev,
has also been sanctioned.
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On 24 March the Government sanctioned six more Russian banks including
Alfa Bank, whose co-founders Mikhail Fridman, German Khan and Petr Aven,
have already been sanctioned by the UK (see below).
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Other financial
institutions included Gazprombank, SMP Bank, the Ural Bank for
Reconstruction and Development, the Russia Agricultural Bank and the
Russian Venture Company, part of the Russian Direct Investment Fund.
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Russia is said to have accumulated more than $630 billion in currency and gold reserves, which it
has been suggested could keep the Russian economy afloat for a year (Al-Monitor,
"Russian
invasion of Ukraine scrambles Middle East diplomacy", 26 February 2022)
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HM Treasury, Press release, 28 February 2022
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Foreign, Commonwealth and Development Office, Press release, 1 March 2022
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HM Treasury, Office of Financial Sanctions Implementation, Financial Sanctions Notice, 1 March
2022
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Foreign, Commonwealth and Development Office, Press release, 24 March 2022
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OFSI, Financial Sanctions Notice, 24 March 2022
"Some 80% of the
Russian banking
sector is now
subject to sanctions
and more than 60%
of the central bank's
foreign reserves are
frozen".
Lord Goldsmith, HL Deb
11 October 2022, c674
