The US is ramping up sanctions by targeting the last major Russian bank not yet blacklisted

In this pool photograph distributed by Russian state owned agency Sputnik, Russia’s President Vladimir Putin chairs a meeting regarding the situation in the Kursk region, in his residence in Novo-Ogaryovo outside Moscow.

Washington is clamping down on Gazprombank, Russia’s last major lender operating free of US sanctions.

Though the bank’s key role in energy markets has shielded it from US restrictions so far, the Treasury Department changed its tune on Thursday.

The announced sanctions will target Gazprombank and its six international subsidiaries, effectively barring the state-owned dealer from participating in global finance. Up until this point, Washington refrained from sanctions in order to maintain gas flows between Russia and remaining European customers.

While the bank serves as the chief financial channel supporting this trade, the US alleged that it also pays a role in Russia’s war in Ukraine.

According to the US, Gazprombank is a Russian conduit for military equipment purchases, and is used to pay soldiers and the families of those killed in the Ukraine war.

The Treasury also targeted over 50 internationally-connected Russian banks, as well as 15 officials.

“Today’s sanctions targeting Russia’s largest remaining non-designated bank, as well as dozens of other financial institutions and officials in Russia, will further diminish and degrade Russia’s war machine,” Treasury Secretary Janet Yellen said. “This sweeping action will make it harder for the Kremlin to evade U.S. sanctions and fund and equip its military.”

Other countries have been much quicker in levying restrictions on Gazprombank, but the US has held off to preserve stability in Europe’s gas supply. But trade dynamics have shifted since Moscow’s 2022 invasion of Ukraine — that year, the US shipped more natural gas to Europe than Russia did for the first time.

However, the bloc remains sensitive to any gas-market disruptions. Last week, European gas prices reached their highest in a year after the Austrian group OMV cited a potential supply halt from Russia.

In its announcement, the US put out a warning that foreign global institutions that join Russia’s alternative financial messaging system will also face sanctions risk. The so-called System for Transfer of Financial Messages is used to evade sanctions and fund Russia’s war effort, the US said.