U.S. President Biden signed an executive order at the end of December 2023 to impose “secondary sanctions” on financial institutions around the world that support Russia’s special military operations in Ukraine. A few days ago, U.S. President Biden also stated that the United States plans to announce a “major” sanctions package against Moscow this Friday, although the specific industries affected have not yet been clarified; this move marks a significant escalation of the U.S. financial war against Russia. Subsequently, the EU also announced that it had reached an agreement in principle and planned to launch a thirteenth round of sanctions against Russia.
As sanctions advance, multinational banks have begun to strictly scrutinize business dealings with Russia, especially cross-border transactions.
Banks in Türkiye, the United Arab Emirates and other countries stop accepting payments from Russia
Turkish banks stopped accepting payments from Russia on a large scale two months ago, causing Russian imports in Turkey to come to a standstill, involving chemical products, auto parts, clothing, footwear and other fields. Although Russia originally planned to solve this problem before January 25, the situation continued to worsen. In February, Russian companies’ accounts in Turkish banks faced closure, and individuals also faced difficulties in the second half of the month. Denizbank, one of Turkey’s major banks, has carried out large-scale checks on customers leaving Russia, requiring proof of residence and stay in Turkey, otherwise the account will be closed.
Meanwhile, banks in the UAE have also restricted transactions with Russia and begun closing personal and business accounts. Even Russian businessmen with offices in the UAE had their corporate accounts closed. The situation is this: “We buy goods in China. The commodity code is sanctioned (included in the prohibited list of goods imported to Russia from the EU or the United States), but the goods themselves are Chinese – without any European technology, which is the most Simple product. The reason why the bank closed the account was that the product was a sanctioned product. They suggested working directly with China and not involving the UAE.”
Many domestic banks tighten remittance review
Since February this year, my country’s domestic commercial banks have also strengthened their review of receipts of Russian-related remittances, resulting in many foreign trade businesses being unable to receive payments normally because they do not meet the review requirements of the beneficiary bank or intermediary bank. The banks involved include large state-owned banks, joint-stock banks, local small and medium-sized banks, etc.
According to a report by the Russian business newspaper “Vedomosti” on February 7, Zhejiang Chouzhou Commercial Bank, a major Chinese bank used by Russian importers, has stopped its business in Russia since February.
On February 21, domestic media quoted the Russian “Izvestia” report that China’s three largest banks that handle Russian payments have stopped accepting payments from Russian financial institutions. However, the Bank of China, one of China’s largest banks, refuted this on the same day and said that the bank still accepts payments from Russian companies in rubles and renminbi. “In Beijing, we can still accept ruble payments,” said a bank employee.
However, recently, some foreign trade professionals have indeed reported that in order to successfully collect payments, they have to deal with multiple banks. From China Construction Bank, Bank of China, Industrial and Commercial Bank of China to China Merchants Bank, Bank of Shanghai, Bank of Ningbo, Tailong Bank, China CITIC Bank, Bank of Communications, China Guangfa Bank, Ping An Bank and Shanghai Pudong Development Bank, they have had contact with almost all mainstream banks. What is frustrating is that some accounts were opened on the same day and received a notification that they could not collect the money the next day.
The reason behind the difficulty in collecting payment is mainly related to the nature of the product. It is understood that there is a restriction list within the bank. As long as the products involved are not on this list and there have been previous transaction records, generally speaking, Russian remittances can still be received normally.
However, for those foreign trade professionals who want to find new bank accounts to receive Russian remittances in addition to the banks they currently cooperate with, the situation is more difficult. Because new banks often lack historical transaction records with these foreign trade companies, this increases the difficulty of opening new accounts and successfully collecting payments.
Special reminder: Foreign trade professionals need to be more careful in choosing appropriate banks and products to ensure smooth transactions. At the same time, in this context, foreign trade professionals with Russian customers must be highly vigilant about the security of foreign exchange collection and pay close attention to changes in the international political and economic situation to cope with possible risks and challenges.
Sino-Russian trade continues to rise, with RMB payments accounting for more than one-third
With the escalation of global sanctions against Russia, Russian importers and foreign trade companies are facing unprecedented challenges. Russian independent journalist Maxim Blunt said that although these sanctions will not completely stop trade between Russia and China, they will definitely increase problems on railways and ports, further exacerbating the pressure on the logistics chain. He warned that this could put Russian consumers at risk of shortages or inflation.
RMB accounts for more than one-third of Russia’s foreign trade payments, and ChinaBranded mobile phones account for nearly 80% of Russian imports
Recently, the Governor of the Central Bank of Russia, Nabiullina, revealed that the RMB has accounted for more than one-third of Russia’s foreign trade settlement payments in the past two years, showing a positive shift in currency settlement in Sino-Russian trade. The latest statistics show that the proportion of Russian exports and imports settled in RMB jumped to 34.5% and 36.4% respectively from 0.4% and 4.3% two years ago. Nabiullina emphasized that Russia is actively promoting settlement in its own currency in response to Western sanctions. At the same time, many countries in the world are also beginning to pay attention to their dependence on the U.S. dollar.
At the same time, the Russian market’s demand for Chinese brand smartphones continues to grow. According to Russian media reports, Chinese brand smartphones accounted for 79% of Russia’s imported smartphones in 2023, an increase of 4 percentage points from the previous year, and a significant increase of 29 percentage points from 2021. Among them, Xiaomi has become the smartphone brand with the largest number of imports into Russia, accounting for nearly 30% of total imports. In addition, TECNO and Infinix, both owned by Chinese brand Transsion, are also among the top five imported brands. In contrast, the supply of Korean brand Samsung and American Apple has declined in the Russian market.
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