Fear of secondary sanctions
UAE banks close Russian accounts
February 19, 2024, 9:28 a.m
Listen to article
This audio version was artificially generated. More info | Send feedback
The attack on Ukraine does not stop international banks from doing business with Russian companies. In December, the US introduced secondary sanctions on foreign institutions that might support the war. Successful, as Russian reports suggest.
Several banks in the United Arab Emirates (UAE) have restricted payment transactions with Russia and started closing accounts of Russian companies and individuals for fear of secondary sanctions. The reported the Russian business newspaper “Vedemosti”, citing three businessmen working in the UAE and a representative of the business association Business Russia. Accordingly, many UAE banks are no longer accepting money from Russia and are not making repayments.
Tax and legal advisors are also said to have confirmed the events. One of them explains in the newspaper that transfers are not credited, but are returned to the senders. According to him, some banks have begun to require explanatory documents for almost every transaction or to refuse payment without giving reasons and close the account. A Russian manager noted that it had become “almost impossible” to get a face-to-face meeting with bank representatives.
There are many companies in the UAE that trade in Russian oil. In December, the US government again tightened its sanctions against Russia and particularly targeted international financial institutions that could help Moscow finance the attack on Ukraine or do business with the “military-industrial world base” of the country are involved. The executive order signed by President Joe Biden stipulates that such banks can be prohibited from having accounts in the United States. Their assets in the USA can also be frozen.
“Uncritical and solvable”
After the turn of the year, banks in China and Turkey had already restricted payment transactions with customers from Russia for fear of secondary sanctions. Transactions with Russian companies that are on the American sanctions list were loud of the financial portal Bloomberg has largely been discontinued. As in the UAE, additional documents were also required to ensure that the stores did not serve the Russian defense industry. A few days ago reported The Russian business newspaper “Kommersant” reported that the number of transactions in Turkish lira fell by 75 percent from December 2023 to January 2024.
According to the business newspaper “Vedemosti”, the Kremlin is aware of the problem. A source close to the government in Moscow is quoted as saying that it is considered uncritical and solvable. After the Russian attack on Ukraine, several Russian banks and financial institutions were separated from the international banking system SWIFT.