Fear of secondary sanctions
UAE banks close Russian accounts
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The attack on Ukraine did 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. Successfully, as Russian reports suggest.
Several banks in the United Arab Emirates (UAE) have restricted payments with Russia for fear of secondary sanctions and have begun closing accounts of Russian companies and individuals. This was reported by the Russian business newspaper “Vedemosti”, citing three businessmen who operate in the UAE and a representative of the business association Business Russia. According to the report, 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 told the newspaper that transfers were not credited but returned to the sender. According to him, some banks have begun to demand explanatory documents for almost every transaction or to refuse payment without giving any reason and close the account. A Russian manager noted that it has become “almost impossible” to get a personal meeting with bank representatives.
Many companies that trade in Russian oil are based in the UAE. In December, the US government again tightened its sanctions against Russia, particularly targeting international financial institutions that could help Moscow finance the attack on Ukraine or are involved in business with the country's “military-industrial base.” The decree signed by President Joe Biden stipulates that such banks can be banned from holding accounts in the United States. Their assets in the US 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. According to the financial portal Bloomberg, business with Russian companies that are on the American sanctions list has largely been stopped. As in the UAE, additional documents were also required to ensure that the business was not for the Russian arms industry. A few days ago, the Russian business newspaper Kommersant reported that the number of transactions in Turkish lira had fallen by 75 percent between December 2023 and 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 not critical and can be solved. After the Russian attack on Ukraine, several Russian banks and financial institutions were cut off from the international banking system SWIFT.
