Sherman Bill Closing Loopholes in U.S. Financial Sanctions Against Russia Passed by Financial Services Committee

Washington, D.C. – Today the House Financial Services Committee unanimously passed Congressman Brad Sherman's (D-CA)H.R. 5512 theRussia and Belarus Financial Sanctions Act which directs U.S. financial institutions to ensure their foreign subsidiaries comply with U.S. sanctions against Russia and Belarus. More than a year-and-a-half after Russia's brutal invasion of Ukraine, this bill would improve the efficacy of U.S. sanctions by finally closing a loophole that has allowed foreign branches of American financial institutions to continue to operate in these heavily sanctioned countries. Congressman French Hill (R-AR) joined Sherman as the lead Republican cosponsor.

"The U.S. and our allied nations' sanctions have been historically effective, cutting deep into the Russian economy. My legislation would sever the remaining ties between the U.S. financial system and Russian war criminals, wealthy oligarchs, and war profiteers," said Congressman Sherman. "The same week that Ukrainian President Zelenskyy travels to the U.S. for the UN General Assembly, we have sent a strong, bipartisan message of unwavering support for Ukraine in its defense against Russia's aggression."

See Sherman's speech during the Committee's debate, where he explained the significance of this legislation, here.

At least eight U.S. financial companies still operate in Russia according to a database maintained by the Yale School of Management's Chief Executive Leadership Institute. The Russia and Belarus sanctions currently in force prohibit U.S. financial institutions from engaging in a wide range of transactions with many Russian and Belarussian businesses and individuals. However, the foreign subsidiaries of U.S. financial institutions are not necessarily required to comply with the same prohibitions as their U.S. parent companies. Therefore, the subsidiaries of these firms, based in Russia itself or other countries, have not consistently and faithfully abided by U.S. sanctions throughout Russia's war in Ukraine.

The Russia and Belarus Financial Sanctions Actwould close this gap by requiring that U.S. financial institutions, that are obligated to comply with each of the sanctions imposed on Russia and Belarus, must take steps to ensure that any entity they own or control, including any foreign subsidiaries, complies with these sanctions as well. This bill would provide a strong disincentive for financial companies that fled Russia to reenter, and for those still operating in Russia, the legislation ensures American financial institutions are not helping to finance Russia's war. The bill will also assist in efforts to convince foreign countries lacking strong sanctions against Russia to adopt them, by requiring full compliance with our own regimes by the foreign branches of American banks wherever they are located.

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