Chinese Banks Tighten Controls on Russian Businesses

Written by Camilla Jessen

Apr.12 - 2024 10:29 AM CET

Several banks in China have tightened control over payments by Russian businesses.

Trending Now

Several major Chinese banks have started to closely examine transactions with Russian businesses, particularly inquiring whether these payments are linked to sanctioned areas or industries.

According to the Russian news agency Izvestia, banks such as the Bank of China and Great Wall West China Bank are now requiring additional details to determine if transactions are connected to the "LPR", "DPR", Russian-occupied Crimea, Iran, North Korea, Cuba, Syria, or the Russian armed forces and defense industry.

These measures appear to be a strategy by the banks to mitigate risks associated with potential sanctions enforcement, primarily from the United States. These stricter controls, which have been in effect since the start of the year, apply whether the payments are made directly from Russia or through other countries.

Business Reactions and Operational Changes

Russian business representatives, including Oleksiy Poroshyn, General Director of JSC "Persha Grupa", and Oleksiy Razumovsky, Commercial Director of Impaya Rus, have confirmed these new requirements.

Businesses must now state that their transactions do not involve the specified regions or military links, freeing the Chinese banks from responsibility in sanction-related investigations.

"If you answer that the transaction is related to the listed territories, then the Chinese side will most likely refuse to make the payment," Oleg Abelev, head of the analytical department at Rykom-Trust, stated.

This careful approach is expected to become a common practice among more banks in the People's Republic of China, according to Oleksiy Tarapovskyi, founder of Anderida Financial Group.

Broader Context and Global Implications

This development is part of a wider trend where international financial institutions are tightening rules on Russian transactions due to geopolitical tensions and sanctions related to Russia's activities in Ukraine.

China's largest banks, including the Industrial and Commercial Bank of China, China Construction Bank, and the Bank of China, have already stopped accepting payments from Russian sanctioned financial organizations.

Similar tightening measures have been seen in Turkish banks, which have also started distancing themselves from Russian clients fearing secondary sanctions. This includes shutting down accounts for Russian companies and setting tougher requirements for Russian individuals wanting to open bank accounts.

Most Read