PEACE Act: New Sanctions Target Foreign Banks Aiding Russia, Mandates Energy Sector Review in 90 Days

The new Preventing the Escalation of Armed Conflict in Europe Act of 2025—or the PEACE Act—is Congress’s latest move to crank up financial pressure on Russia following ongoing attacks in Ukraine. The bill is pretty direct: it tells the Treasury Department to impose tough new restrictions on foreign banks that are still helping sanctioned Russian entities.

The Correspondent Account Crackdown

Think of this as closing the back door on Russian financing. Under Section 3, the Treasury Secretary has 180 days to create rules that will either completely block or severely restrict U.S. banks from maintaining “correspondent accounts” or “payable-through accounts” for certain foreign financial institutions. What’s a correspondent account? It’s basically how a foreign bank accesses the U.S. financial system—allowing them to process dollar transactions, clear checks, and move money internationally.

If a foreign bank is caught "knowingly giv[ing] significant financial help" to people or entities already sanctioned under existing Executive Orders (like those targeting Russia’s military, economy, or specific individuals), they risk losing their access to the U.S. dollar system entirely. This means foreign banks that continue to facilitate transactions for sanctioned Russian individuals or companies operating in the energy sector will find their ability to do business globally severely hampered. For U.S. banks, this means a new compliance headache, as they’ll need to vet their foreign partners even more closely to avoid severe penalties under the International Emergency Economic Powers Act (IEEPA).

The Energy Sector Spotlight

Beyond the banking restrictions, the bill forces a specific, time-sensitive review of Russia’s energy giants. Section 4 mandates that within 90 days of the bill becoming law, the Treasury Secretary must issue a formal report determining whether Gazprom, Rosneft, and Lukoil meet a specific legal definition of a “foreign person” under existing law.

This isn't just bureaucratic paperwork. This determination is a critical step that could set the stage for applying further, more targeted sanctions against these massive energy companies that fuel Russia's economy. While the bill doesn't impose sanctions directly, it forces the government to officially classify these entities, which often precedes major regulatory action.

The Presidential Safety Valve

While the bill imposes strict new rules, Section 5 gives the President a significant amount of flexibility—a 180-day waiver, renewable indefinitely. The President can temporarily set aside these new sanctions for a foreign bank if they determine it is either necessary to end the current national emergency or, more broadly, if the waiver is “important for the national interest of the United States.”

This “national interest” clause is a classic policy wildcard. While it provides necessary maneuvering room for diplomacy or unexpected global economic issues, it’s also a subjective standard. It means the President could potentially lift sanctions on a foreign bank simply by arguing it serves the U.S. national interest, even if that bank is still dealing with sanctioned Russian entities. If this happens, Congress is supposed to get a detailed explanation, but the power itself rests squarely with the executive branch.

A Five-Year Clock

Finally, the Act isn't permanent. Section 6 gives it a five-year shelf life. It will automatically expire five years after enactment, unless Russia stops its “destabilizing actions against Ukraine’s borders and independence” sooner. This built-in sunset clause provides a clear off-ramp, ensuring the sanctions are tied to the ongoing conflict rather than becoming permanent fixtures of U.S. law.