On Tuesday, a bipartisan group of senators introduced legislation to freeze Russia's gold holdings, stating that doing so would make it more difficult for Moscow to dodge the consequences of international sanctions imposed in response to its invasion of Ukraine.
"The free world's sanctions are harming Russia's economy, and we must maintain the pressure as long as Putin continues his unjustifiable and brutal invasion of Ukraine," Sen. Angus King said in a statement introducing the measure.
According to King, Russia's vast gold reserves are one of the few remaining assets that Putin can utilize to preserve his country's economy from collapsing further.
Secondary sanctions would be imposed on American entities that willfully interacted with or moved gold from Russia's central bank reserves under the Stop Russian Government and Oligarchs from Limiting Democracy Act.
According to the proposal, which was co-sponsored by King and other senators John Cornyn, Bill Hagerty, and Maggie Hassan, Americans would face sanctions if they sold gold in Russia, either physically or electronically.
Per the senators, the bill would also provide counsel to Americans on how to avoid such punishments.
Also according to senators, Russia now has $130 billion in gold reserves and is able to take advantage of a loophole in existing sanctions against its central bank by allowing government officials and oligarchs to launder money through gold.
The Russian Federation is now buying gold to offset the ruble's depreciation and then selling it on international markets in exchange for high-value money, per the senators.
The senators added that by enacting secondary sanctions, they hope to discourage the acquisition of Russian gold and therefore thwart Russia's capacity to "soften the financial impact of sanctions."
"By penalizing these reserves, we can further isolate Russia from the global economy and make Putin's increasingly expensive military war more difficult," King added.
By leveraging this legal ambiguity and laundering money through gold, Russia, according to Cornyn, has "taken a page out of Venezuela's book."
This bill, according to the senator, would impose secondary sanctions on parties that assist Russia in financing its war by purchasing or selling gold.
Hagerty encouraged Congress to make it more difficult for Putin to sell Russia's gold, emphasizing that such actions are used to "finance Russia's assault of Ukraine."
Hassan urged legislators to ensure that "Putin can't dodge our sanctions" as Russia's economy continues to slide into "freefall."
