A bipartisan group of senators offered legislation on Tuesday to freeze Russia’s gold reserves, arguing the move would make it more difficult for Moscow to avoid the pain from international sanctions imposed over the country’s invasion of Ukraine.
“The free world’s sanctions are devastating Russia’s economy — and as long as Putin continues his unprovoked and horrific invasion of Ukraine, we must keep up the pressure,” Sen. Angus King (I-Maine) said in a statement announcing the legislation. “Russia’s massive gold supply is one of the few remaining assets that Putin can use to keep his country’s economy from falling even further.”
The Stop Russian Government and Oligarchs from Limiting Democracy Act would apply secondary sanctions to American entities that intentionally transacted with or transported gold from Russia’s central bank holdings.
Americans would also be subject to sanctions if they sold gold physically or electronically in Russia, according to the proposal, sponsored by King and fellow Sens. John Cornyn (R-Texas), Bill Hagerty (R-Tenn.) and Maggie Hassan (D-N.H). The bill would also provide guidance to Americans as to how they could avoid such sanctions, the senators explained.
Today, Russia holds $130 billion in gold reserves in the country and is able to exploit a loophole in the existing sanctions targeting its central bank by allowing government officials and oligarchs to launder money through gold, according to the senators.
Due to this loophole, the Russian Federation is now buying gold to offset the devaluation of the ruble and then selling that gold on international markets in exchange for high-value currency, the senators said.
By implementing secondary sanctions, the senators said that they would aim to deter the purchase of Russian gold and thereby foil Russia’s ability “to soften the financial impact of sanctions.”
“By sanctioning these reserves, we can further isolate Russia from the world’s economy and increase the difficulty of Putin’s increasingly-costly military campaign,” King said. “We urge the speedy passage of these bipartisan sanctions to hold Putin accountable for his crimes.”
Cornyn described Russia as having “taken a page out of Venezuela’s book” by manipulating this legal ambiguity and laundering money through gold.
“This legislation would apply secondary sanctions to parties who help Russia finance their war by buying or selling this blood gold,” Cornyn said in a statement.
Hagerty urged Congress to “make it harder for Putin to liquidate Russia’s gold,” stressing that these activities serve “to fund its invasion of Ukraine.”
“These bipartisan secondary sanctions on Russia’s gold transactions will build on the Biden Administration’s recent Russia sanctions and further choke off Russia’s economy from capital,” Hagerty said.
As Russia’s economy continues to plunge in financial “freefall,” Hassan called upon legislators “to make sure that Putin can’t circumvent our sanctions.”
“This bipartisan bill closes a critical loophole that would allow Russia to sell off its gold reserves to prop up the Russia economy,” Hassan said. “The U.S. and our allies must be steadfast in standing up to Russian aggression and ensure that we block any escape hatch Putin has in getting around the full weight of our sanctions.”