The U.S. Treasury Department and State Department are quietly urging banking giants including JPMorgan and Citigroup to continue working with certain strategic Russian companies, according to people familiar with the situation, according to Bloomberg.

Bloomberg notes that during a seven-hour congressional hearing in September, House Democrat Brad Sherman pressed JPMorgan Chase CEO Jamie Dimon to cut ties with Russian companies such as Gazprom.

Sherman argued that banks like JPMorgan are using the sanctions loophole to continue doing business in Russia despite the invasion of Ukraine.

“We’re following the instructions of the U.S. government when they asked us to do it,” Dimon replied, before Sherman cut him off with a look at Citigroup Inc.’s Jane Frazier.

The exchange highlighted how the country’s biggest banks continue to do business with major Russian companies to cushion the economic shock while complying with Putin’s wartime sanctions.

The US government did not impose a full embargo against Russia

The low-key effort is part of the administration’s efforts to minimize the negative effects of the sanctions regime designed to punish Russia. While some members of Congress are calling for stronger measures against Russia, the administration is trying to impede Russia’s progress while averting a global economic catastrophe.

“Congress needs to understand that the U.S. government has not imposed a comprehensive embargo on Russia, there are still allowed areas of business,” Nnedinma Ifudu Nweke, a lawyer who specializes in U.S. economic sanctions and trade embargoes, said in an interview. Akin Gump Strauss Hauer & Feld LLP.

The finance ministry “will continue to hold meetings to educate banks on those areas of permitted transactions, particularly in the humanitarian space,” Nweke said.

The Biden administration has repeatedly stated that it wants banks and businesses to prevent money from flowing out of unauthorized sectors of the Russian economy. But the scope of the talks with the banks was not previously reported.

Treasury and State Department officials have asked lenders to continue providing basic services such as U.S. dollar settlements, payment transfers and trade finance agreements for those Russian companies that are exempt from certain aspects of the sanctions, such as Gazprom or fertilizer producers PJSC. Uralkali” or PJSC “FosAgro”, sources said.

Both banks and the U.S. government must strike a balance between denying President Vladimir Putin the money he needs to finance an invasion while at the same time reducing wider economic shocks.

Banks are expected to comply with the administration’s sanctions by denying service to sanctioned banks, individuals and entities, and could face billions in fines for failure to comply. However, they are also important in keeping money flowing around the world, even if much of it comes out of Russia.

For example, JPMorgan began divesting most of its operations in Russia after the invasion, although the company said “limited activity” would continue. Same with Citigroup.

Representatives of Citigroup and JPMorgan declined to comment.

A finance ministry official said the department had issued guidance to the banking industry to ensure humanitarian aid, energy and agricultural activities were still allowed.