A view of the Moscow Exchange office in Moscow on March 24, 2022. AFP
Here's how these sanctions would work:
HOW MUCH GOLD DOES RUSSIA HAVE?
Russian gold purchases increased in 2014, after the U.S. issued sanctions on Russia for Putin's invasion of Crimea. Now the country holds $100 billion to 140 billion in gold reserves, which is roughly 20 percent of the holdings in the Russian Central Bank, according to U.S. officials. Additionally, the Bank of Russia announced Feb. 28, shortly after several Russian banks were removed from the SWIFT bank messaging system, that it would resume the purchase of gold on the domestic precious metals market.
HOW COULD RUSSIA USE GOLD TO EVADE SANCTIONS?
The U.S. says that Russia can and has used gold to support its currency as a way to circumvent the impact of sanctions. One way to do that is by swapping the gold for a more liquid foreign exchange that is not subject to current sanctions. Another way would be to sell the bullion through gold markets and dealers. The gold could also be used to directly purchase goods and services from willing sellers.
HOW WOULD THE SANCTIONS APPLY?
The U.S. announcement to block gold transactions was done alongside Group of Seven and European Union allies that will also impose the gold reserve ban. New guidance from the U.S. Treasury Department states that American individuals, including gold dealers, distributors, wholesalers, buyers, and financial institutions are generally banned from buying, selling or facilitating gold-related transactions involving Russia and the various parties that have been sanctioned.
WHAT KIND OF IMPACT COULD THIS HAVE ON RUSSIA?
The move should further impact the country's ability to launder money and will in effect apply secondary sanctions on people who trade in gold with Russia, experts say. ``It is another way to close sanctions loopholes, and increase economic pressure on Russian entities,`` said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security. The ban on gold transactions is also an attempt to prevent innovative financial transactions through other countries that continue to do business with Russia.
WHAT OTHER SANCTIONS HAVE BEEN IMPOSED?
The U.S. also took additional sanctions actions on Thursday. It sanctioned dozens of Russian defense companies, 328 members of the Russian State Duma _ or state assembly _ and the head of Russia's largest financial institution. Those actions are on top of export controls and financial penalties issued in the past month on Putin, his inner circle, some of the country's top financial institutions, along with several banking institutions' removal from the SWIFT bank messaging system.