Trump faced a fierce, bipartisan backlash this week after a sudden announcement that the US was withdrawing from northeastern Syria in advance of Turkey's military operations, blindsiding both lawmakers and American allies.
US President Donald Trump has signed an executive order giving the Treasury Department wider authority to slap sanctions against Turkey and its affiliates, as Ankara advances into northeast Syria for the third day.
After Milley spoke, President Tayyip Erdogan said Turkey will not stop its operation against the Kurdish militia "no matter what anyone says".
Al Jazeera's Sinem Koseoglu reports from Istanbul.
Mr. Trump has said he is watching developments closely and will "ruin" the Turkish economy if their military goes too far.
"These are very powerful sanctions".
"The president is concerned about the ongoing military offensive and potential targeting of civilians, civilian infrastructure, ethnic or religious minorities and also the president wants to make very clear it is imperative that Turkey not allow even a single ISIS fighter to escape", he said.
He said that Turkey's operations were defensive and legal under the charters of both the United Nations and North Atlantic Treaty Organisation, to which to which Turkey belongs. "No one should doubt that we will retaliate.to any step that will be taken against this".
Mnuchin stressed that the sanctions have not yet been activated, but that Trump has given the approval to issue them.
"We are putting financial institutions on notice", Mnuchin said Friday in the White House briefing room.
In its first big attack since the assault began, Islamic State claimed responsibility for a deadly auto bomb in Qamishli, the biggest city in the Kurdish-held area of northeast Syria, even as the city came under heavy Turkish shelling.
"Now there are threats coming from left and right, telling us to stop this", Erdogan said, AFP reported.
Five Islamic State fighters fled a jail there, and foreign women from the group being held in a camp torched tents and attacked guards with sticks and stones, the Kurds said.
"We, the USA military, have no responsibility to ... secure those ISIS prisoners in Syria", Milley said.
"This decision was made to ensure American troops were not caught up in the fighting between Turkish and Kurdish forces", he said. Articles appear on euronews.com for a limited time.