This paper examines the impact of financial sanctions on Russian banks using data from the Eurosystem’s real-time gross settlement system, TARGET2. The study focuses on the effects of sanctions imposed by the European Union on Russian banks following Russia’s aggression against Ukraine in 2014 and 2022. The research finds that financial sanctions significantly reduce payment flows from sanctioned Russian bank accounts, both in terms of the volume (intensive margin) and the number of accounts involved (extensive margin). Among the various sanction measures, exclusion from SWIFT, a global provider of secure financial messaging services, has the largest effects. The study uses detailed financial transaction data from TARGET2 to analyze the impact of different types of financial sanctions on cross-border financial flows. The data allows for the identification of individual bank accounts and the tracking of payment flows. The analysis reveals that financial restrictions severely restrain the financial activities of targeted financial institutions. The effects of sanctions are more pronounced in 2022 compared to 2014, likely due to stricter measures implemented by the EU, including exclusion from SWIFT. The paper also explores the effects of sanctions on the extensive margin of financial relationships, finding that financial sanctions significantly reduce the number of cross-border business relationships of targeted Russian banks. Additionally, the study finds evidence of anticipation effects, where financial flows of targeted Russian banks decline before the actual implementation of sanctions. The results are robust to various sensitivity analyses, including the inclusion of Belarus banks and the use of staggered difference-in-differences estimation techniques. Overall, the study concludes that financial sanctions substantially reduce payment flows processed in TARGET2 from accounts of sanctioned Russian banks. The findings confirm the effectiveness of sanctions in reducing financial flows and highlight the significant impact of exclusion from SWIFT on financial transactions. The study contributes to the literature on financial sanctions by focusing on financial activities rather than trade patterns and by using detailed, granular data to analyze the effects of different types of sanctions.This paper examines the impact of financial sanctions on Russian banks using data from the Eurosystem’s real-time gross settlement system, TARGET2. The study focuses on the effects of sanctions imposed by the European Union on Russian banks following Russia’s aggression against Ukraine in 2014 and 2022. The research finds that financial sanctions significantly reduce payment flows from sanctioned Russian bank accounts, both in terms of the volume (intensive margin) and the number of accounts involved (extensive margin). Among the various sanction measures, exclusion from SWIFT, a global provider of secure financial messaging services, has the largest effects. The study uses detailed financial transaction data from TARGET2 to analyze the impact of different types of financial sanctions on cross-border financial flows. The data allows for the identification of individual bank accounts and the tracking of payment flows. The analysis reveals that financial restrictions severely restrain the financial activities of targeted financial institutions. The effects of sanctions are more pronounced in 2022 compared to 2014, likely due to stricter measures implemented by the EU, including exclusion from SWIFT. The paper also explores the effects of sanctions on the extensive margin of financial relationships, finding that financial sanctions significantly reduce the number of cross-border business relationships of targeted Russian banks. Additionally, the study finds evidence of anticipation effects, where financial flows of targeted Russian banks decline before the actual implementation of sanctions. The results are robust to various sensitivity analyses, including the inclusion of Belarus banks and the use of staggered difference-in-differences estimation techniques. Overall, the study concludes that financial sanctions substantially reduce payment flows processed in TARGET2 from accounts of sanctioned Russian banks. The findings confirm the effectiveness of sanctions in reducing financial flows and highlight the significant impact of exclusion from SWIFT on financial transactions. The study contributes to the literature on financial sanctions by focusing on financial activities rather than trade patterns and by using detailed, granular data to analyze the effects of different types of sanctions.