Export to Russia Attention! Since February, many banks have strengthened the audit of Russia-related business!

US President Joe Biden signed an executive order at the end of December 2023 to impose “secondary sanctions” on financial institutions around the world that support Russia’s special military operations in Ukraine. US President Joe Biden also said the United States planned to unveil a “significant” package of sanctions against Moscow on Friday, although the specific sectors affected have not been specified. The move marks a significant escalation in the US financial war against Russia. Subsequently, the European Union also announced that it had reached an agreement in principle and planned to introduce the 13th round of sanctions against Russia.

As the sanctions push forward, multinational banks have begun to scrutinize their business dealings with Russia, especially cross-border transactions.

Banks in Turkey, the United Arab Emirates and other countries stopped accepting Russian money

Turkish banks largely stopped accepting payments from Russia as early as two months ago, bringing Russian imports to a halt in a wide range of sectors, including chemical products, auto parts, clothing and footwear. Although Russia had planned to solve the problem by January 25, the situation has continued to deteriorate, with Russian companies facing the closure of their accounts in Turkish banks in February and individuals facing difficulties in the second half of the month. Denizbank, one of Turkey’s leading banks, is conducting large-scale checks on customers leaving Russia, asking for residence permits and proof of stay in Turkey, or the account will be closed.

At the same time, banks in the UAE have also restricted transactions with Russia and started closing personal and corporate accounts. Even Russian businessmen with offices in the UAE had their company accounts closed. It goes like this: “We buy goods in China. The product code is sanctioned (on the banned list of goods imported into Russia from the EU or the US), but the product itself is Chinese – without any European technology, it is the simplest product. The bank closed the account on the grounds that the goods were subject to sanctions. They suggested working directly with China and not involving the UAE.”

Many domestic banks have tightened their checks on remittances

Since February this year, China’s domestic commercial banks have also strengthened the review of the receipt of Russia-related remittances, resulting in many foreign trade businesses that do not meet the review requirements of the receiving bank or intermediary bank and cannot collect money normally. The banks involved include large state-owned banks, joint-stock banks, small and medium-sized local banks, etc.

According to a report in the Russian business newspaper Vedomosti on February 7, Zhejiang Chouzhou Commercial Bank, a major Chinese bank used by Russian importers, has stopped doing business in Russia since February.

On February 21, domestic media quoted Russia’s Izvestia newspaper as saying that three of China’s largest banks, which handle Russian loans, had stopped accepting payments from Russian financial institutions. However, the Bank of China, one of China’s largest banks, countered that on the same day, saying that it still accepts payments from Russian companies in rubles and yuan. “In Beijing, we can still accept payments in rubles,” said one bank employee.

But recently, some foreign trade people do report that in order to successfully collect money, they have to deal with multiple banks. From China Construction Bank, Bank of China, Industrial and Commercial Bank to China Merchants Bank, Bank of Shanghai, Bank of Ningbo, Tai Long Bank, CITIC Bank, Bank of Communications, Guangfa Bank, Ping An Bank and Shanghai Pudong Development Bank, they have had contact with almost all mainstream banks. It is frustrating that some accounts are opened the same day only to receive a notice the next day that they cannot be paid.

Behind the collection dilemma, it is mainly related to the nature of the product. It is understood that there is a list of restrictions within the bank, as long as the products involved are not included in the list, and there are previous transaction records, generally speaking, you can still normally receive Russian remittances.

However, the situation is trickier for foreign traders looking for a new bank account to receive remittances from the Russian side, in addition to the banks they currently work with. New banks often lack a history of transactions with these foreign trade companies, which makes it more difficult to open new accounts and successfully collect payments.

Special reminder: Foreign traders need to be more careful to choose the right banks and products to ensure the smooth progress of transactions. At the same time, in this context, foreign traders with Russian customers must be highly vigilant about the security of foreign exchange collection, and pay close attention to changes in the international political and economic situation to cope with possible risks and challenges.

China’s trade with Russia continues to rise, with RMB payments accounting for more than one-third of the total

With the escalation of global sanctions against Russia, Russian importers and foreign trade enterprises are facing unprecedented challenges. Maxim Blount, an independent Russian journalist, said that although these sanctions will not completely stop trade between Russia and China, they will certainly increase the problems of railways and ports, further increasing the pressure on the logistics chain. He warned that this could leave Russian consumers at risk of shortages or inflation.

RMB accounts for more than one-third of foreign trade payments in Russia, and Chinese brand mobile phones account for nearly 80% of Russian imports

Recently, Nabiullina, governor of the Central Bank of Russia, revealed that the RMB has accounted for more than one-third of Russia’s foreign trade settlement payments in the past two years, showing a positive shift in currency settlement in Sino-Russian trade. The latest statistics show that the share of Russian exports and imports settled in yuan jumped to 34.5% and 36.4%, respectively, from 0.4% and 4.3% two years ago. Nabiullina stressed that Russia is actively pushing for settlement in its own currency in response to Western sanctions, while many countries around the world are beginning to focus on their dependence on the dollar.

At the same time, the demand for Chinese-branded smartphones in the Russian market continues to grow. According to Russian media reports, Chinese brand smartphones accounted for 79% of imported smartphones in Russia in 2023, an increase of 4 percentage points over the previous year, and a significant increase of 29 percentage points over 2021. Among them, Xiaomi became the most imported smartphone brand in Russia, accounting for nearly 30% of the total imports. In addition, TECNO and Infinix, owned by Chinese brand Transsion, are also among the top five imported brands. In contrast, the supply of South Korean brands Samsung and American Apple has declined in the Russian market.

Source: Shipping Network