US President Joe Biden signed a new executive order on December 22, broadening sanctions on banks working with Russia “even if they don’t know about it”, according to a White House press release.

Following the EU's twelfth sanctions package passed in the middle of December, which included a ban on Russian diamonds and measures to curb Moscow's oil revenue, the new US executive order expands sanctions authority over financial institutions involved in significant transactions or services for already sanctioned entities within Russia's military-industrial complex.

US banks are already banned from working directly with Russian entities as part of the SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in February 2022. Banks have beefed up their compliance to ensure they don’t do business with Russian front companies. However, the new executive order makes it possible to impose sanctions on a US bank if the ultimate beneficiary of a financial transaction is Russia, even if there are several intermediators in the transaction. That will significantly increase the work of compliance departments.

The US executive order also follows the EU and prohibits the export of Russian diamonds and seafood from Russian territorial waters or vessels, aligning with EU sanctions. Deputy Treasury Secretary Wally Adeyemo said in a Financial Times op-ed that the order sends a clear message that those financing transactions resulting in goods on the battlefield will face severe consequences.

Treasury Secretary Janet Yellen stated, "Today we are taking steps to level new and powerful tools against Russia’s war machine," indicating a readiness to use the new authority decisively against financial institutions facilitating the supply of Russia's war machine.

The measures aim to present a "stark choice" to financial institutions supporting Russia's war efforts—cease transactions involving critical goods or risk losing access to the US financial system. Adeyemo noted that these measures apply even to unwitting financial partners, placing the responsibility on institutions and exporters in third-party countries to proactively prevent collaboration with Russia's military-industrial complex.