Russia faces challenges exporting oil as banks in China, UAE and Türkiye boost sanctions compliance requirements – Reuters
Pravda Ukraine
Russian oil companies have been facing delays in payment for oil and fuel for several months as banks in China, Türkiye and the United Arab Emirates (UAE) have become more cautious due to secondary sanctions imposed by the United States.
Source: Reuters with reference to its sources
Details: Reuters noted that payment delays reduce revenues to the Kremlin and make them unstable. This allows Washington to achieve dual sanction objectives, including obstructing the flow of funds to Russia to punish it for the war in Ukraine while simultaneously not disrupting global energy flows.
Several banks in China, the UAE and Türkiye have recently tightened their sanctions compliance requirements, leading to delays or even refusals of money transfers to Russia.
Quote: “Banks, cautious of the U.S. secondary sanctions, started to ask their clients to provide written guarantees that no person or entity from the US SDN (Special Designated Nationals) list is involved in a deal or is a beneficiary of a payment.”
In addition, Kremlin spokesperson Dmitry Peskov confirmed there were payment issues when asked about reports that banks in China slowed payments.
Reuters also pointed out that back in December 2023, the US Treasury issued an order warning of potential sanctions for Russia’s non-compliance with price restrictions on foreign banks and called on them to strengthen compliance controls.
This was the first direct warning of the possibility of secondary sanctions against Russia, placing it on par with Iran in specific trade sectors.
Following the US order, banks in China, the UAE and Türkiye, which conduct business with Russia, intensified their checks and began demanding additional documentation.
Background:
- Banks in the United Arab Emirates (UAE) have restricted their dealings with Russia and started closing both personal and business accounts due to the risk of coming under secondary sanctions.
- Turkish banks are refusing to work with Russian banks for fear of secondary sanctions.
- Turkish banks have tightened their policy towards Russian clients – some financial institutions have started closing business accounts and have increased requirements for individuals seeking to open a bank account. The Kremlin confirmed that reports of Russian citizens having difficulties in the Turkish banking system are true.
- China’s state-owned banks are tightening restrictions on financing Russian clients after the US threatened secondary sanctions against foreign financial firms that help Russia fund its war against Ukraine.
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