Saturday, April 15, 2023, 05:32
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Dubai’s largest ENBD bank freezes the accounts of Russians PHOTO: Bloomberg
After the start of the war in Ukraine caused by Vladimir Putin and especially after the mobilization of new recruits in September 2022, Russians left the country en masse, as in a real exodus. A country has been called a paradise for fugitive Russians, especially the metropolis of Dubai, but now everything is changing dramatically for them. Thus, the largest bank in Dubai ENBD began to freeze the investment accounts of Russians.
The bank will transfer the Russian assets to special accounts, but customers will no longer be able to withdraw the funds. Emirates NBD (ENBD), the second largest bank in the United Arab Emirates, has started sending letters to its Russian customers warning that if they are not residents of the EU, Switzerland or the European Economic Area, their assets will be transferred to a separate account. with restrictions on cash transfers, accordingly Novye Izvestia.
Two clients of the bank confirmed that they received such letters, and sources in the banking market confirmed that they send such messages. Bank customers will be required to use a separate special account to receive coupons, dividends and proceeds from the sale of securities.
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They will not be able to transfer these assets to their ENBD account. Customers will also be able to sell securities from their account using the “delivery without payment” (FOP) mechanism instead of the more common “delivery against payment” (DVP) mechanism, which provides for the simultaneous flow of securities and money between parties to the transaction.
ENBD claims that such restrictions were introduced in accordance with the EU directive and that there are no exceptions for Russian customers residing in the UAE.
This requirement is mandatory for ENBD, as the bank uses the services of Clearstream and Euroclear depositories, like other European and Swiss banks. Other banks in the UAE have not yet received notices from depositors and will not restrict the investment activities of Russians, however, there is a risk that this will happen in the future.
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Even earlier, representatives of Dubai banks anonymously told reporters that their organizations will act with Russian clients with extreme caution, as they have already suffered violations of international sanctions against Iran and Sudan, and now understand all possible risks.
Experts are skeptical about the potential of Dubai’s banking system – it is far from developing like the financial behemoths created in Switzerland and other traditional places of accumulation of funds.
Last month it became known that the United Arab Emirates canceled the license of the Russian bank MTS – after the announcement made by UK and United States to impose sanctions against it. Now the branch does not have the possibility to open new accounts and carry out transactions, except for the repayment of previously assumed obligations, and the bank’s use of the payment systems of the Central Bank is limited only for this purpose.
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Thousands of Russians settled in the UAE last year, mainly in Dubai. They complained that opening bank accounts in local banks was problematic.
Dubai’s new Russian diaspora spans a spectrum that includes multi-billionaires who have been hit with sanctions and middle-class tech workers who have fled President Putin’s war.
Russian government statistics show Russians made 1.2 million trips to the UAE in 2022, up from one million in 2019, the year before the pandemic. Russians were the top non-resident buyers of real estate in Dubai in 2022 by nationality, according to Betterhomes, a Dubai brokerage.
