Chinese Banks Block Payments from Russia

Written by Camilla Jessen

Mar.21 - 2024 12:28 PM CET

Since mid-January, several Chinese banks have ceased accepting payments from Russia in yuan due to concerns over potential secondary sanctions.

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Amid intensifying Western sanctions against Russia, some Chinese financial institutions have started notifying their clients of this change, leading to the return of payments.

This developmet was reported by Izvestia, citing sources in the banking sector.

Over the past two months, Ping An Bank and Bank of Ningbo, which rank 13th and 15th in China in terms of capitalization, have stopped providing relevant services, the publication writes.

Additionally, six smaller banks refuse to accept such payments, as noted by Alexey Poroshin, General Director of JSC "The First Group," and sources from Russia's banking sector.

Fears of Secondary Sanctions

The measure, implemented since mid-January, stems from Chinese bankers' fears over possible secondary sanctions and pressures from the United States, explained one of the newspaper's sources.

In early February, it was reported that Chouzhou Commercial Bank, a major Chinese bank, halted financial transactions with both the Russian Federation and Belarus. According to Vedomosti, citing three business circle sources, the stoppage affects transactions across all payment systems, including SWIFT, Russia's SPFS, and China's CIPS.

In late December, US President Joe Biden signed an executive order enabling sanctions against foreign financial institutions involved in transactions benefiting the Russian military-industrial complex, thereby supporting Russian aggression against Ukraine.

The decree targets financial institutions engaged in "significant transactions" on behalf of individuals sanctioned by Washington for supporting Russia's defense sector or facilitating such transactions.

As a result, Chinese state banks have tightened financing restrictions for Russian clients following the United States' announcement of secondary sanctions on foreign financial entities aiding Russia's war efforts in Ukraine.

Bloomberg reported in mid-January that at least two Chinese banks began reviewing their Russian business dealings in January, planning to cut ties with clients on sanction lists and cease all financial services to the Russian military sector, regardless of the transaction's currency and location.

Restrictions on banking transactions for Russians in the UAE and Turkey were also reported.

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