Yellen Says U.S. Will Address Potential Leakages In Russia Sanctions

The United States will continue to address potential sources of "leakages" in the sweeping sanctions imposed on Russia over its invasion of Ukraine, U.S. Treasury Secretary Janet Yellen said on Wednesday during a visit to Chicago.

Yellen said the hard sanctions slapped on Russia were having a significant impact, as reflected in the rouble's sharp fall.

"Russia is increasingly an economic island," she said.

Asked whether sanctions to curb Russia's oil and gas exports could follow, she said, "nothing is off the table in terms of future sanctions". However, the United States had not taken this step in order to spare Americans, Europeans and other people around the world from the harshest consequences of the action.

Sanctions imposed last Sunday and Monday have so far restricted 80% of the Russian banking sector's assets and "immobilized" about half of the Russian central bank's assets, she said.

The rouble, which has lost about a third of its value since the start of the year, touched a fresh record low of 110 to the dollar in Moscow on Wednesday as the country's financial system teetered under the weight of Western sanctions. Russia calls its actions in Ukraine a "special operation."

"We will continue to look at how the sanctions work and whether there are leakages and we have the possibility to address them," Yellen told reporters after a speech at the University of Illinois-Chicago's Innovation Center.

The former chair of the U.S. Federal Reserve said she knew there were concerns about Russian elites using cryptocurrencies as a possible means to evade sanctions, but said there were laws in place to prevent that from happening.

"That is a channel to be watched," she said. "But ... many participants in the cryptocurrency networks are subject to anti-money-laundering (laws) and sanctions. So it's not that that sector is completely one where things can be evaded."

Yellen said she does not expect the Russian sanctions to have a major impact on the economic trajectory of the United States, due to limited U.S. trade and financial connections with Russia. Any effects will most likely be transmitted through higher energy prices, she said.

The Treasury will continue to "go after oligarchs or Russian elites who are key to President Putin's corrupt power."

"We have sanctioned many of these individuals over the last few weeks and we are assembling a task force with Justice Department colleagues and our allies to uncover, freeze, and seize their wealth around the world."

Yellen, who visited Chicago's Ukrainian Village neighborhood with Illinois Governor Jay Pritzker, also said that stronger economic policies were needed to strengthen America at home, despite an economic recovery from COVID-19 that has exceeded most expectations and U.S. growth that looks poised to continue.