New PEACE Act Mandates Seizure of Frozen Russian Assets, Targets Foreign Banks with $1M Fines

The Preventing the Escalation of Armed Conflict in Europe Act of 2025, or the PEACE Act, is the legislative response to Russia’s continued military action in Ukraine, and it takes a hard line on financial institutions still dealing with sanctioned Russian entities. This bill doesn’t just ask nicely; it mandates the U.S. Treasury to set up a new regulatory wall within 180 days, effectively banning or severely restricting any foreign bank that knowingly provides significant financial services to already sanctioned entities, or those operating in Russia’s energy sector. If you’re a bank outside the U.S. helping a Russian energy giant move money, the U.S. is about to cut off your access to the American financial system. If you try to skirt these new rules, the penalties are steep: civil fines are set at the greater of $377,700 or twice the value of the transaction, and willful violations can lead to criminal fines up to $1,000,000 and up to 20 years in prison.

The Direct Hit: Seizing Russian State Assets

Beyond sanctions, the most impactful part of this bill is Section 6, which deals with frozen Russian sovereign assets. No later than 90 days after this bill passes, the Treasury Secretary must seize “covered Russian resources”—meaning money and property belonging to the Central Bank of the Russian Federation, the Russian National Wealth Fund, and the Ministry of Finance—that are currently sitting in U.S. financial institutions. This isn't just freezing; this is confiscation. Those funds are then immediately transferred to the Ukraine Support Fund to be used for general support or specifically to buy defense articles for Ukraine. This is a crucial step that turns frozen paper assets into immediate, tangible aid, bypassing the need for lengthy international negotiations over asset transfer.

The Fine Print: Who’s Getting Pinched and Why

This legislation creates immediate headaches for foreign financial institutions (FFIs) that have been playing both sides. If an FFI has been facilitating transactions for, say, a subsidiary of the Russian energy giant Gazprom (which Treasury is required to investigate under Section 4), they are now risking their entire ability to conduct business in U.S. dollars. For the rest of us, this means the U.S. is serious about cutting off Russia’s financial lifelines, which could lead to further instability in global energy markets if the sanctions significantly restrict Russia’s ability to sell oil and gas. The bill also gives the Treasury Secretary broad power to determine who counts as a “United States financial institution,” potentially expanding the net of who must comply with the asset seizure rules.

The Executive Safety Valve

While the sanctions are tough, the bill includes a couple of escape hatches for the President. Section 5 allows the President to waive the new sanctions on foreign banks for up to 180 days at a time if it’s deemed “really important for the national interest of the United States.” Similarly, Section 6 allows the President to pause the seizure of Russian state assets for up to a year, again citing national interest or if Russia starts making “meaningful moves” toward peace. This waiver power is a double-edged sword: it provides necessary flexibility in a complex geopolitical situation, but it also means a President could unilaterally hit the brakes on these aggressive financial measures without needing Congressional approval beyond reporting the justification. This means the actual enforcement strength of the PEACE Act relies heavily on the administration’s willingness to use its full power.