Banks operating in the United Arab Emirates (UAE) have imposed limitations on their interactions with Russia and have initiated closures of both individual and corporate accounts due to concerns about potential exposure to secondary sanctions.
According to reports from Vedomosti, a Russian news outlet aligned with the Kremlin, citing information from businessmen active in the UAE and a representative of the Delovaya Rossiya association, this trend has been corroborated by tax and legal advisors. A source linked to the Russian Cabinet of Ministers acknowledged the issue, characterizing it as manageable though not critical.
A representative of Delovaya Rossiya highlighted that presently, UAE banks are declining to accept funds originating from Russia and are refraining from facilitating payments in the direction of Russia. Moreover, Emirati banks are reportedly closing accounts held by companies owned by Russian nationals, often without transparent explanations for the closures.
Reports suggest that UAE banks began tightening their policies towards clients with Russian ties in the autumn of 2023, ceasing to accept payments from Russia during that time. Subsequently, some payment chains have had to be rerouted through a bank in Hong Kong, but as of February 2024, this intermediary has ceased participation, leading to payments being conducted via cryptocurrency.
The situation has particularly impacted companies with Russian beneficiaries that neither send nor receive funds to or from Russia, adding complexity to their banking arrangements.
Vedomosti alleges that UAE banks implemented restrictions on Russian clients before the US announcement of secondary sanctions in December 2023, possibly influenced by the significant presence of foreign shareholders in major credit institutions.
While it remains feasible for individuals or entities from Russia to open accounts in UAE banks, the process is reportedly more protracted for those lacking connections to local elites.
In a related context, Turkish banks have similarly begun distancing themselves from Russian financial institutions over fears of secondary sanctions, tightening policies towards Russian clients by closing business accounts, and heightening requirements for individuals seeking to establish bank accounts. Confirming these reports, the Kremlin acknowledged challenges faced by Russian citizens in Turkey’s banking system.
Additionally, China’s state-owned banks are reportedly tightening restrictions on financing Russian clients following US threats of secondary sanctions against foreign financial entities aiding Russia in its conflict with Ukraine.
