WASHINGTON (Reuters) -The U.S. imposed fresh sanctions on Russia's Gazprombank on Thursday, the Treasury Department said, wielding its most powerful sanctioning tool against the bank as President Joe Biden steps up actions to punish Moscow for its invasion of Ukraine before leaving office in January. 

The move effectively kicks Gazprombank - one of Russia's largest banks - out of the U.S. banking system, bans their trade with Americans and freezes their U.S. assets.

Gazprombank is partially owned by Kremlin-owned gas company Gazprom. Since Russia's invasion in February 2022, Ukraine has been urging the U.S. to impose more sanctions on the bank, which receives payments for natural gas from Gazprom's customers in Europe.

The fresh sanctions come days after the Biden administration allowed Kyiv to use U.S. ATACMS missiles to strike Russian territory. On Tuesday, Ukraine fired the weapons, the longest range missiles Washington has supplied for such attacks on Russia, on the war's 1,000th day. 

The Treasury also imposed sanctions on 50 small-to-medium Russian banks to curtail the country's connections to the international financial system and prevent it from abusing it to pay for technology and equipment needed for the war. It warned that foreign financial institutions that maintain correspondent relationships with the targeted banks "entails significant sanctions risk."

"This sweeping action will make it harder for the Kremlin to evade U.S. sanctions and fund and equip its military," said Treasury Secretary Janet Yellen. "We will continue to take decisive steps against any financial channels Russia uses to support its illegal and unprovoked war in Ukraine."

Gazprombank and the Russian embassy in Washington did not immediately respond to requests for comment.

Along with the sanctions, Treasury also issued two new general licenses authorizing U.S. entities to wind down transactions involving Gazprombank, among other financial institutions, and to take steps to divest from debt or equity issued by Gazprombank.

The sanctions were imposed under a Biden executive order. It was not immediately clear whether President-elect Donald Trump could remove them if he decided to take a different stance on Russia. 

After the invasion in 2022, the Treasury placed debt and equity restrictions on 13 Russian firms, including Gazprombank, Sberbank and the Russian Agricultural Bank.

The U.S. Treasury has also worked to provide Ukraine with funds from windfall proceeds of frozen Russian assets. 

Gazprombank is a conduit for Russia to purchase military materiel in its war against Ukraine, the Treasury said. The Russian government also uses the bank to pay its soldiers, including for combat bonuses, and to compensate the families of its soldiers killed in the war.

The administration believes the fresh sanctions improve Ukraine's position on the battlefield and ability to achieve a just peace, a source familiar said.