Russian sanctions force international banks to scramble this weekend to comply

Big bank executives and compliance teams worked around the clock over the weekend to make sense of the deluge of new sanctions imposed on Russia and its banking system following its invasion of Ukraine. Banks are working to ensure they understand the full implications of the restrictions, including the banning of some Russian lenders from the SWIFT international payment system. Announced on Saturday without naming names, the sector will have to wait for details. With global financial markets set to open in hours, bankers are doing all they can to enforce the sanctions, including desperately calling on governments and regulators to close knowledge gaps. I explained to the staff there.

Banks are generally very cautious and will do so until the full picture is clear, a source at a US bank said, noting that they are prioritizing changes that need to be implemented immediately. Goldman Sachs, Morgan Stanley, Citigroup and JPMorgan Chase all declined to comment. Bank of America did not respond to a request for comment sanctioning the pedestal. American and European banks have already had to impose sanctions on Russian companies, as it did in 2014 after Russia’s annexation of Crimea.

European bank officials said they were asking authorities to give them more time to modify their systems to bring them into full compliance. Global banks have extensive experience with sanctions and have invested heavily in their compliance programs in recent years, but the scale of the restrictions imposed on a large country like Russia is unprecedented, industry sources said. Iranian and North Korean banks had previously barred it from accessing SWIFT, but those banks were not significant players in international trade, the sources said.

Many of them have maintained strong business ties with Russia, earning millions of dollars facilitating trade, advising Russian companies on mergers and acquisitions, and raising capital in international markets. This activity is now under threat, including the investment banking fees that many US banks charge. Citigroup has a retail banking business in Russia and has been trying to sell it since April. The latest US restrictions announced last week complicate the situation.

Banks have extensive know-your-customer programs that require lenders to screen all parties they do business with. And since the sanctions were imposed in 2014, US banks have become increasingly capable of identifying the true beneficiaries of their assets.

These include prohibiting banks from having correspondent banking relationships with Sberbank, blocking payments to Russia’s largest lenders and facilitating transactions with other banks, and restricting all of VTB and its 20 subsidiaries. This includes freezing US assets and banning transactions with them. One of the biggest concerns for US and European banks is the risk of inadvertently doing business with licensed Russian companies through shell companies that may not be openly related, banking sources said.

Summary of news:

  • Russian sanctions force international banks to scramble this weekend to comply
  • Check out all the news and articles from the latest business news updates.