EXPLAINER: How the U.S. and allies can freeze Russian gold

WASHINGTON (AP) — The U.S. and its allies said Thursday they're moving to block financial transactions with Russia's Central Bank that involve gold, aiming to further restrict the country's ability to use its international reserves because of Vladimir Putin's invasion of Ukraine. Putin has been building his gold stockpile since 2014.

Here's how these sanctions would work:

HOW MUCH GOLD DOES RUSSIA HAVE?

Russian gold purchases increased in 2014, after the U.S. issued sanctions on Russia for Putin's invasion of Crimea. Now the country holds $100 billion to 140 billion in gold reserves, which is roughly 20 percent of the holdings in the Russian Central Bank, according to U.S. officials. Additionally, the Bank of Russia announced Feb. 28, shortly after several Russian banks were removed from the SWIFT bank messaging system, that it would resume the purchase of gold on the domestic precious metals market.

HOW COULD RUSSIA USE GOLD TO EVADE SANCTIONS?

The U.S. says that Russia can and has used gold to support its currency as a way to circumvent the impact of sanctions. One way to do that is by swapping the gold for a more liquid foreign exchange that is not subject to current sanctions. Another way would be to sell the bullion through gold markets and dealers. The gold could also be used to directly purchase goods and services from willing sellers.

HOW WOULD THE SANCTIONS APPLY?

The U.S. announcement to block gold transactions was done alongside Group of Seven and European Union allies that will also impose the gold reserve ban. New guidance from the U.S. Treasury Department states that American individuals, including gold dealers, distributors, wholesalers, buyers, and financial institutions are generally banned from buying, selling or facilitating gold-related...