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UAE banks limit business with Russia and begin closing accounts of Russian clients

Monday, 19 February 2024, 09:19
UAE banks limit business with Russia and begin closing accounts of Russian clients
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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.

Source: Vedomosti, a Kremlin-aligned Russian news outlet, with reference to businessmen working in the UAE and a representative of the Delovaya Rossiya association

Details: The trend was also confirmed by tax and legal advisers. A source close to the Russian Cabinet of Ministers said that the Russian government is aware of the problem, although it considers it non-critical and solvable.

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"At the moment, UAE banks do not accept money from Russia and do not [facilitate] payments in the opposite direction [to Russia]," a representative of Delovaya Rossiya noted.

The source said that Emirati banks continue to close accounts of companies owned by Russian citizens, "and are not always transparent about the reasons for closure".

It is noted that UAE banks began to tighten their policy towards clients with Russian citizenship in the autumn of 2023. At that time, credit institutions stopped accepting payments from Russia.

"A bank in Hong Kong had to be added to the payment chain, but since February 2024 it has stopped participating in the scheme, and payments are now made in cryptocurrency.

The situation with banking services has become more complicated for companies with Russian beneficiaries that do not transfer money to, nor receive money from, Russia," the sources said.

Vedomosti claimed that the UAE banks introduced restrictions for Russian clients before the US announced secondary sanctions in December 2023. The sources suggested that this may be due to the significant share of foreign shareholders in large credit institutions.

The sources stated that it is still possible for individuals or legal entities from Russia to open an account in UAE banks, but the procedure takes longer for those without connections to local elites.

Background:

  • Turkish banks refuse 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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