Russia struggles to recover oil payments as China, UAE and Turkey step up vigilance on banks -March 27, 2024 at 7:00 a.m.

Russian oil companies face delays of up to months in getting paid for crude and fuel as banks in China, Turkey and the United Arab Emirates (UAE) become increasingly wary of sanctions restrictions imposed by the United States, said eight sources familiar with the matter.

Late payments reduce the Kremlin's revenues and make them irregular, which allows Washington to achieve the dual objective of its sanctions policy: interrupting funds intended for the Kremlin to punish it for the war in Ukraine without interrupting energy flows. worldwide.

Several banks in China, the United Arab Emirates and Turkey have tightened their sanctions compliance requirements in recent weeks, leading to delays or even rejection of money transfers to Moscow, according to the eight sources banking and commercial.

Banks, wary of US secondary sanctions, have begun asking their customers to provide written guarantees that no person or entity on the US Special Designated Nationals (SDN) list is involved in a transaction or is the beneficiary of a payment.

The sources asked not to be named due to the sensitivity of the matter and because they are not authorized to speak to the media.

In the United Arab Emirates, banks First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) have suspended several accounts linked to trading in Russian goods, according to two sources.

The United Arab Emirates' Mashreq Bank, Turkish banks Ziraat and Vakifbank and Chinese banks ICBC and Bank of China are still processing payments, but with delays of several weeks or months, according to four sources.

Mashreq Bank declined to comment. UAE banks FAB and DIB, Turkish banks Ziraat and Vakifbank, Chinese banks ICBC and Bank of China did not respond to requests for comment.

Asked about reports that Chinese banks had slowed payments, Kremlin spokesman Dmitry Peskov said payment problems existed.

“Of course, the unprecedented pressure exerted by the United States and the European Union on the People's Republic of China continues,” Peskov said in a daily conference call with journalists.

“Of course, this creates certain problems, but it cannot become an obstacle to the development of our trade and economic relations (with China),” Peskov added.


The West imposed a slew of sanctions on Russia after its invasion of Ukraine in February 2022. Trading in Russian oil is not illegal as long as it is sold below the $60 per barrel cap. imposed by the West.

Russian oil exports and corresponding payments were disrupted in the first months of the war, but later normalized as Moscow redirected flows towards Asia and Africa, to the detriment of Europe.

“Problems resurfaced from December after banks and companies realized the threat of US secondary sanctions was real,” a trade source said.

The source was referring to a US Treasury order issued on December 22, 2023, which warned that sanctions could be applied to foreign banks for circumventing Russian price caps and called on them to strengthen compliance with the rules.

This is the first direct warning about the possibility of secondary sanctions against Russia, putting it on an equal footing with Iran in certain trade areas.

Following the US order, Chinese, UAE and Turkish banks that work with Russia tightened their controls, began requesting additional documentation and trained more staff to ensure transactions complied with the price cap , the trade sources said.

The additional documents may also include ownership details of all companies involved in the transaction and personal data on the individuals controlling the entities, so that banks can verify any exposure to the SDN list.

At the end of February, UAE banks had to step up monitoring of payments as they were asked to provide data to US correspondent banks and the US Treasury if they transacted to China for the account of a Russian entity, according to a banking source familiar with the matter.

“This has led to delays in processing payments to Russia,” one of the sources said.

One source said one payment was delayed by two months, while another said the delays amounted to two or three weeks.

“The situation has become difficult, and not only for dollar transactions. It sometimes takes weeks for a direct yuan-ruble transaction to be executed,” said one of the traders. (Reporting by Reuters in MOSCOW, Aizhu Chen in SINGAPORE, Engen Tham in BEIJING, supplemented by Ziyi Tang, Florence Tan, Can Sezer, Jonathan Spicer, Federico Maccioni, Nidhi Verma, Hadeel Al Sayegh and Kevin Huang; writing by David Evans)

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