Large UAE banks began to limit payments and close accounts of Russians

Due to the risk of secondary sanctions, UAE banks began to limit payments and close accounts of Russians, sources told Vedomosti. The government is aware of the problem, although they consider it uncritical, a source close to the Cabinet clarified.

Large banks in the United Arab Emirates (UAE), due to the risk of secondary sanctions, began to limit settlements with RUSSIA and close accounts for companies and individuals. Three businessmen working in the UAE and a representative of the Business Russia association told Vedomosti about this.

According to the latter, currently UAE banks do not accept money from Russia and do not make payments in the opposite direction. Moreover, they continue to close accounts of companies whose owners are Russian citizens, including for opaque reasons, he added.

Three businessmen with offices in the UAE confirmed this information. Vedomosti's interlocutors noted that difficulties began long before the American law on secondary sanctions was issued in December 2023, after which countries such as Turkey and CHINA sharply changed their policies towards clients from Russia. One of the businessmen said that second-tier banks treated companies and individuals from Russia more loyally at that time, but did not do it for free: clients had to purchase additional services or increase their account balance.

Another business representative, a manager of a forwarding company, clarified that the opportunity to pay from Russia (including in dirhams) has disappeared since September. “The company was opened for a reason - the banks offered a profitable conversion, and also did not disclose information about the final beneficiaries when asked by foreign organizations,” the source explained, adding that after this a third intermediate jurisdiction was added to the chain - Hong Kong. However, since February of this year, the Hong Kong bank also stopped accepting payments, he noted.

Another businessman, the owner of an energy company, added that it has become almost impossible to open an account with the largest banks. He noted that it is possible to negotiate privately with a personal manager, but after the first check, “you will fly out like a traffic jam.”

As Olga Pletneva, partner of Kept’s tax and legal consulting department, explained to Vedomosti, it is still possible to open new accounts for companies with Russian owners, although for quite some time, since Russia is on the “red list” in the UAE. Settlements with Russia directly, according to her, are now difficult, including due to the fact that the Ak Bars bank, which was the main channel for payments, was included in the sanctions lists. The US Treasury added the bank to the SDN list on September 14 last year.

The government is aware of the problem, although they consider it uncritical and solvable, a source close to the Cabinet of Ministers told the newspaper.

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On December 22 , US President Joe Biden signed a decree on measures against foreign banks and other financial institutions involved in transactions related to supplies for the Russian defense industry. The document states that the Secretary of the Treasury, in consultation with the Secretary of State, “is authorized to impose sanctions on a foreign financial institution” upon determining that it facilitates transactions related to the Russian military-industrial complex in the technology, defense, construction, aerospace, and manufacturing industries.

Sanctions include a ban on opening or restricting the use of correspondent accounts in the United States and blocking of property in the United States. American authorities also gained the opportunity to block the import of Russian-made diamonds, seafood and alcoholic beverages, which have undergone significant transformation outside Russia.

“We expect financial institutions to make every effort to ensure that they are not knowing or unwitting facilitators of circumvention and evasion [of sanctions],” Treasury Secretary Janet Yellen said at the time. The US Treasury will not hesitate to use new tools “to take decisive and surgical action against financial institutions that facilitate the supply of the Russian war machine,” she promised.

Russian authorities call international sanctions illegitimate and demand their lifting. The Kremlin noted that Russia has options for circumventing Western restrictions.