Ukraine crisis: Countries use financial penalties against Russia
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BBC Reporter James Waterhouse is in the Ukraine capital city Kyiv and has sent Newsround this report
The UK and US are among several countries who have criticised Russian President Vladimir Putin for his actions in Ukraine.
It is after he ordered troops into Donetsk and Luhansk, two rebel-held regions in eastern Ukraine and declared the two regions 'independent states'.
He said he wants to protect them against Ukrainian forces by sending in troops to help with "peacekeeping".
However the Ukrainian President, Volodymyr Zelensky, hit back at Putin's announcement saying that recognising Donetsk and Luhansk as independent violated Ukraine's right to govern themselves independently, without interference from other people.
Ricky explains what's happened after Russia sent troops into part of Ukraine
UK Prime Minister Boris Johnson has said that Putin has "torn up" international law by sending in troops and that financial penalties, called sanctions, will now be put in place against Russia.
US President Joe Biden has called Putin's actions "the beginning of a Russian invasion of Ukraine" and has blocked the Russian government from getting money from the US.
President Zelensky is on the left, and President Putin is on the right
Zelensky said that while he wanted peace, he added that "we are not afraid" and "we will not give anything to anyone", and called on other countries for support.
After an urgent meeting of his National Security and Defence Council, President Zelensky also said Ukrainian citizens in Donetsk and Luhansk can evacuate to other parts of Ukraine if they feel unsafe.
This graphic shows the areas of Ukraine that Russia have recognised, and which parts of those areas are controlled by Russian-backed rebels who have been fighting Ukrainian forces there since 2014
Why does this announcement matter?
For months now, there have been tensions between the Russian and Ukrainian governments. Russia has been sending troops to the Ukrainian border, and has insisted it's only for routine military exercises.
Russian TV has shown pictures of tank exercises close to the border with Ukraine
However, Ukraine and other governments around the world have seen it as an act of aggression, and have asked them to leave repeatedly.
Russia made a list of demands, including banning Ukraine from ever joining Nato, and said it would only pull its armies back if its conditions were met.
In recent years, the Russian government has given lots of passports to people in those parts of Ukraine. Western allies think this is now being used as a way to justify bringing military troops into the areas, as protection for Russian citizens.
Some residents of Donetsk celebrated the decision last night
But because the Ukrainian government still considers the two areas part of its country, this is being seen as the start of an invasion.
Western leaders are worried that all of this has set the stage for a conflict between the two countries.
What's happening now?
It is not clear if Russian troops have actually gone into Ukraine yet but military vehicles have been seen near the border.
The Ukrainian government has told any of its citizens living in Russia that they should leave straight away.
The top security official for Ukraine says a state of emergency is set to be announced which could last 30 days.
United Nations Secretary General António Guterres said: "The latest developments regarding Ukraine are a cause of grave concern."
How has the UK reacted?
The UK Prime Minister Boris Johnson said Putin's actions were "plainly in breach of international law" and "a flagrant violation of the sovereignty and integrity of Ukraine".
Boris Johnson leaving to make a statement on Russia's decision in the House of Commons on Tuesday
He has announced sanctions against five Russian banks: Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank.
A sanction is a penalty applied to a country by another when they are seen to be doing something wrong
They can also be set against companies, organisations or even individual people
They are imposed in an attempt to change a country's government's behaviour
They are one of the toughest measures a country can take, short of going to war
They are often financial, so about money - for example, a country may say they'll stop trading with another, which impacts how much money that country can make
Three individuals, Gennady Timchenko, Boris Rotenberg and Igor Rotenberg, will also have any assets (such as money or property) they hold in the UK frozen and be banned from the country. They're all thought to be close allies of Vladimir Putin, which is why they've been singled out.
Some people say the sanctions do not go far enough, but the government says it is ready to hit Russia with harder measures.
Boris Johnson announced on Wednesday that the UK will also provide military support to Ukraine. This includes weapons for defence and non-lethal aid, which could include things like vehicles and communications equipment.
How have countries around the world reacted?
President Joe Biden signed an executive order (which is a decision a President makes that doesn't need approval from congress) immediately banning any financial investment to the two Ukrainian regions.
The European Union is financially targeting 27 Russian individuals and organisations, including banks.
Germany has also suspended a Russian plan to build a huge gas pipeline called Nord Stream 2.
Canada, Australia and Japan have also imposed sanctions.
Has anyone backed Russia's decision?
Russia's foreign ministry has called on other nations to also recognise the rebel regimes in eastern Ukraine.
Nicaragua and Syria said they backed Moscow's recognition of Donetsk and Luhansk as independent, though it isn't clear if they will formally recognise them as well.
There have also been other voices of support for Russia including Cuba, North Korea and Iran.