China’s state-owned banks are tightening restrictions on financing Russian clients after the United States threatened secondary sanctions against foreign financial firms that help the Russian Federation in military operations in Ukraine.
Writes about this Bloomberg with reference to familiar sources.
At least two banks have ordered reviews of their Russian businesses in recent weeks, focusing on cross-border transactions, the people said, speaking on condition of anonymity.
Banks will sever ties with sanctioned clients and stop providing any financial services to the Russian military industry, regardless of currency or location of transactions, the sources said.
Lenders are stepping up customer due diligence, including checking whether their companies, authorized beneficiaries and ultimate controllers are registered in Russia, the people added.
According to them, the check will extend to non-Russian customers who conduct business in Russia or transfer critical goods to Russia through third countries.
The move marks a tightening of restrictions that Chinese state-owned banks have imposed since at least early 2022, after Russia’s invasion of Ukraine triggered a wave of sanctions from countries including the United States.
Last month, the US Treasury Department said it would impose secondary sanctions on banks that facilitate deals for Russia to purchase equipment needed for its military-industrial complex. This is due to Biden’s decree, which in December 2023 ordered the introduction of sanctions against banks from third countries that help finance the Russian military-industrial complex and related industries,” the agency emphasizes.
Bloomberg also notes that China’s exports to Russia have risen sharply during the great war in Ukraine.
In addition, China has become the largest importer of fossil fuels from Russia, with coal supplies more than doubling since 2020. The sanctions have deprived the Russian Central Bank of access to about half of its international reserves, leaving it with only gold and the yuan.
The use of the Chinese currency has increased: the share of payments in yuan rose to 27% as of September 2023 from 15% at the end of 2021.
Also, Russian banks switched to the Chinese payment system UnionPay in 2022 after Visa Inc. and Mastercard Inc. suspended their activities.
China’s four largest state-owned banks have experience complying with previous US sanctions against Iran and North Korea to avoid losing access to the US dollar clearing system, the agency adds.
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2024-01-16 09:10:22
