Central Asian banks reject Russian payments, disrupting transactions
Banks in Central Asia begun massively refuse to accept payments from Russia (Photo:Russian Central Bank)
Banks in Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan are increasingly refusing to accept funds from Russian companies, according to a review of the activities of fuel and energy sector transportation companies Digital FEA, GTL, and Logita Trade, The Moscow Times reported on July 25.
According to these companies, the share of refused payments through Central Asian banks rose to 30% in July, and the average transaction time increased by 15%, now taking up to two weeks.
This situation is attributed to the tightening of compliance measures by banks in these countries. They are requesting more additional documents and explanations, including information about companies, their founders, customers, sources of funds, and transaction details. These problems intensified in the second quarter of 2024 and now occur even for payments in local currencies.
The cross-border transfer format is changing daily, and companies are facing increasing difficulties, including a rise in the number of returns and refusals of transfers, noted payment aggregator CDEK Pay.
The Russian Chamber of Commerce and Industry and the business organization Opora Rossii confirmed the issues with transfers to Central Asian banks. According to Nikolai Dunaev, chairman of the Support of Russia Committee on International Relations, banks are avoiding connections with US sanctions.
Problems with international payments began in Russia at the end of 2023 when US President Joe Biden authorized the US Treasury to impose secondary sanctions on credit institutions for working with sanctioned Russian companies and aiding Russia's military-industrial complex.
Following this, banks in Turkey, the UAE, and China began refusing payments from Russia. In June, the United States expanded this mechanism to include all Russian sanctioned legal entities, including banks, under the definition of the Russian military-industrial base.
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