US President Joe Biden signed an executive order on Friday authorizing the Treasury Department to impose new sanctions that would cut off foreign financial institutions working with Russia from those operating in the US, according to a press statement by US Secretary of State Antony Blinken.

According to The Iran Project,The executive order focuses on “secondary sanctions to go after financial institutions” cooperating with enterprises related to Russia’s military industrial complex.

“Today’s action underscores the need for financial institutions around the world to ensure they are not facilitating activities that support Russia’s war effort and implement due diligence practices that protect them from being exploited by Russia’s procurement networks,” Blinken said.

“This announcement makes clear that those financing and facilitating the transactions of goods that end up on the battlefield will face severe consequences,” Deputy Treasury Secretary Wally Adeyemo wrote in an op-ed for Financial Times on Friday.

The goal of the measure is to pour “sand into the gears of Russia’s military logistics,” forcing banks outside the jurisdictions of the US and EU to cut ties with Russia, another senior official said.
He noted that it marks the first time the US has authorized secondary sanctions “to go after financial institutions during this conflict” in order to “disincentivize the type of behavior that is furthering Russia’s ability to build weapons of choice that they are using in Ukraine.”

The new restrictions will enable Washington to target institutions that are providing goods and financial services to Russia in a more “surgical” way. Banks under sanctions would be denied access to the US financial system.

“Over the course of the last two years, we have spent time talking to jurisdictions and financial institutions about the importance of making sure that they do not provide material support to the Russian economy. And with the president signing the executive order, we have a tool that allows us to hold them accountable,” CNN quoted a senior administration official as saying.

The official said the sanctions are intended to inflict long-term “pain” that will see Russia’s economy weaken and industries falter.

Sensitive items that banks should avoid facilitating reportedly include semiconductors, machine tools, chemical precursors, ball bearings, and optical systems.