What does Visa's instruction on opening cards to foreigners say?

The day before, Telegram channels began discussing Visa’s instructions, allegedly prohibiting the issuance of cards to Russians abroad. This document does not introduce such prohibitions, RBC sources and lawyers say, although the conditions for opening accounts have become more stringent

Media and telegram channels reported new restrictions for Russians on opening Visa cards in foreign banks. Initially, the Ugrumochnaya channel wrote about this, citing an internal document of the payment system. RBC was looking into what the Visa document actually says and whether Russians still have the right to open cards abroad. On the one hand, a number of banks have indeed tightened conditions for Russians over the past year and a half, but on the other hand, there are no complete bans on opening accounts, practice shows and lawyers confirm.

“[Bank card] issuers determine the customer's residency in accordance with applicable law, and the relevant requirements may vary depending on the country in which the cards are issued. This aspect is not subject to regulation by Visa rules,” a source close to the payment system told RBC.

Where IT all started

This week, journalist Gera Ugryumova in her Telegram channel, citing excerpts from the rules of the payment system, reported that Visa has banned the issuance of cards to non-resident Russians in border countries. According to Ugryumova, the information was shared with her by the CEO of Liber.Money (a service for remotely opening cards for Russians in foreign banks), Arsen Kazibekov. In a post citing banking sources, Ugryumova also said that Visa prohibits opening cards to all Russians, including residents of the countries where the card is issued.

As Kazibekov told RBC, the opinion that Visa prohibited issuing cards to Russians was expressed by representatives of foreign banks on the sidelines of the Baku Fintech Forum, which was held in Azerbaijan on October 26 (Kazibekov was present there). Representatives of the payment system, who were also at the event, did not comment on the situation, he said. According to Kazibekov, in three months his company, which is trying to find foreign partners to issue cards to Russians, talked to more than 50 banks in the CIS, but they refused to cooperate, citing prohibitive documents from Visa and Mastercard with fines of $1 million.

He suggested that we are talking about Visa rules that prohibit cross-border issuance, but clarified that the relevant document does not directly speak of a ban on issuing cards to Russians. According to him, the document in question, called the “Reminder of the Prohibition on Cross-Border Issuance,” was sent to banks in April 2022. An RBC source familiar with the contents of the document also says that it was sent to banks on April 8, 2022.

The most discussed Visa document, which RBC reviewed, does not indicate the date.

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“Issuing banks must not solicit customers or issue Visa cards or products outside their licensing country,” the rules state. It adds that Visa has identified a number of such cases, so banks should review their card issuance programs to ensure they are not issued to customers "located outside the issuer's licensed jurisdiction." If these rules are violated, banks face a fine of up to $1 million.

RBC sent a request to Visa.

The rules do not directly prohibit the issuance of cards to Russians or citizens of any other countries. It only mentions Russia as an exception to the rules because Visa suspended its operations in the country in March 2022. The geography of the rules is global (that is, all regions where Visa is present), but the header of the letter contains a clarification excluding Russia . Formally, the legal entity of the payment system still exists in Russia, as follows from the Unified State Register of Legal Entities.

As a former employee of a large bank, which specialized in issuing cards, including from international payment systems, told RBC, these are the old Visa rules that govern the cross-border opening of cards. “Visa gives each issuer a specific set of rights within its license and bank identification number (BIN). As part of the general rules, issuers are prohibited from issuing cards to persons outside the licensing country. And six exceptions to this rule are also described.” He explained that, within the framework of the rules, banks can open cards to citizens of the Russian Federation if they provide a local identifier and address. RBC's interlocutor suggested that some of the cards could have been opened with violations.

Visa allows banks to issue cards outside their licensing country in “very limited and special circumstances,” according to the document:

through a foreign branch licensed by Visa; banks can issue cards in a country outside the scope of their license for employees of global companies; distribute prepaid cards outside the issuing country to government or commercial entities; issue prepaid cards for money transfers; travel cards for payments between buyers and enterprises in the tourism sector, etc.; in the European region for citizens of countries included in the single economic zone. How do foreign banks now issue cards to Russians?

In March 2022, international payment systems (IPS) Visa and Mastercard left Russia, which is why their cards issued by Russian banks stopped working abroad. In order to be able to use non-cash payments abroad, Russians began to massively open MPS cards in foreign banks. The simplest opening conditions were offered by banks in nearby countries. Thus, in 2022, the number of cards in Tajikistan, Uzbekistan, Belarus, Armenia and Kyrgyzstan increased more than in 2021. The least noticeable growth rates were recorded in Kazakhstan and Georgia, whose banks are popular among Russians.

The decision to open cards is made not by payment systems, but by banks. The payment system cannot determine the circle of people for whom banks can open accounts, but, as in any commercial relationship, it can determine the conditions for the distribution and use of its products, explains Kira Vinokurova, co-head of the sanctions law and compliance practice at Pen & Paper. Thus, the Visa conditions themselves cannot affect whether the client will be accepted for service by the bank, but they can reduce the issuance of Visa cards, the lawyer says.

There have been no reports of a complete ban on issuing cards to Russians in any country. RBC studied popular Russian-language chats in countries where Russians open cards, including Kazakhstan, Armenia, Turkey, Serbia, Georgia, and Azerbaijan. There have been no conversations about widespread - and new - problems with opening cards in recent weeks.

In practice, the conditions for opening cards for Russians are sometimes complex and depend on the credit institution. Vinokurova recalls that at the moment there is no direct ban on opening bank accounts for Russians even in major Western jurisdictions. However, the internal policies of many banks have become stricter regarding the opening of cards to Russians, the lawyer says: “Refusal to open an account may occur in connection with the client’s identification: connection with Russia in itself can be considered a factor that increases compliance risks in the current conditions. Being part of the international banking system and conducting transactions with foreign currencies, including the Dollar and euro, foreign banks strive to protect themselves as much as possible when opening accounts, the source of funds in which will most likely be Russia.”

For example, in the fall of 2022, Turkish banks established additional requirements for new clients due to the influx of Russian citizens willing to open cards in local banks. In the spring of 2023, Swiss banks announced blocking the accounts of Russians if they paid taxes to the Russian budget, but later some clients were able to challenge this decision, local lawyers told RBC. There was no complete ban on opening accounts.

How card tourism is changing

After the departure of Visa and Mastercard, special intermediary services appeared in Russia that offer services for remote opening of cards in foreign banks. The Visa rule could lead to the fact that Russians and other non-residents would not be able to open accounts and receive bank cards remotely, but at the moment such a rule has not been established at the legislative level and is determined at the level of the conditions of the payment system, Vinokurova says.

For example, in the spring of 2022, immediately after the departure of the Ministry of Railways from Russia, the Commercial Bank of Kyrgyzstan opened Visa cards to Russians in its office in Moscow, Kommersant wrote. To do this, it was necessary to provide a Russian passport and a notarized power of attorney to represent interests in the bank for a certain citizen of Kyrgyzstan. After which the bank opened the card in the parent structure and delivered it to Russia.

The main scenario of card tourism does not involve opening a card through an office in Moscow - we are talking about opening it without the client’s presence in the bank by proxy. A number of banks are already closing this scheme. For example, the Belarusian People's Bank (BNB-Bank) from September 26 stopped servicing non-residents who became clients of the bank by proxy.

In turn, the National Bank of Kazakhstan has developed a draft resolution that should regulate the issuance of cards to non-residents. This will be possible in person and on the basis of documents confirming the validity of being on the territory of Kazakhstan: employment contract, training contract, residence permit, etc. Public discussion of the project is set until November 9. Before this, a number of banks in Kazakhstan only asked Russians for a foreign passport and a local tax number to open cards.

According to BKHK law firm partner Roman Khaminsky, banks in states friendly to Russia are beginning to act in a similar way to credit institutions in EU countries , which request a residence permit or passport, documents on real estate, work or business, and so on. They do this to demonstrate to Western regulators that only those Russians who have close economic and personal ties with a particular country have access to the financial system, the lawyer explains.