“Golden Crown” press service reported RBC said that due to the partners’ reluctance to violate the sanctions regime imposed on various credit institutions, the payment system will not be able to make cross-border transfers from cards of Russian banks.
“When making cross-border transfers, we have to be guided by the requirements of direct paying partners, settlement banks and our own compliance division for transfers in other countries; from third countries” – says message.
Therefore, customers of Sberbank, Alfa-Bank and Tinkoff cannot transfer abroad. When users try to make a transfer via the mobile application, they receive a notification saying “You must select or add a card from another bank to pay the transfer fee”.
Through the “Golden Crown” from Russia and other countries, you can transfer money to more than 10 countries in various currencies, depending on the country, such as dollars, euros, rubles and local currencies.
Therefore, intermediaries conducting cross-border operations of Golden Crown, which are directed from the cards of sub-sanctioned banks, are at risk of falling under secondary restrictions. However, Corona Pay was not the only system that allowed sending money abroad from Russia.
Sanctions on banks
In connection with Russia’s recognition of the independence of the DPR and LPR, as well as the start of a special military operation in Ukraine, the USA, EU and other countries began to impose sanctions on Russian banks from the end of February 2022. Thus, the US Treasury imposed sanctions on Sberbank, VTB, Otkritie, Sovcombank, Promsvyazbank, Novikombank, Alfa-Bank, Rosselkhozbank, MKB and Gazprombank. Organizations are included in the SDN list – meaning US citizens and legal entities are prohibited from transacting with these banks. Among other things, international payment systems Visa and Mastercard ceased interaction with banks. Payment from cards of these systems takes place within Russia, since the processing of any “plastic” transactions within the country is provided by the National Payment Card System (NSPK). In total, more than 30 Russian banks are under various restrictions.
The sanctions also led to the inability to pay for purchases made in foreign online stores, the suspension of the Apple Pay and Samsung Pay systems. Applications of many Russian banks disappeared from the AppStore and Google Play Internet application stores. In response, Russian citizens began to open accounts and receive cards in neighboring countries – Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan and other countries.
Due to the suspension of Visa and Mastercard, citizens of the Russian Federation began to use the Mir payment system abroad, but they are no longer accepted, although in some countries where it is possible to pay with Mir cards, they are no longer accepted, although there are no direct sanctions. explained by making the decisions about the work themselves. As a result, working with Mir in Vietnam, Kazakhstan, Turkey, Uzbekistan and Sri Lanka was discontinued. Mir continues its activities in Belarus, Kyrgyzstan, Tajikistan and South Korea.
Fears of foreign banks are related to the warning of the US Treasury about the possibility of imposing sanctions on the Russian payment system – this means that foreign credit institutions that cooperate with Mir will fall into secondary restrictions. Despite the US Treasury imposing sanctions on the NSPK in mid-September, Mir is still not under direct restrictions.
In addition, from the end of February 2022, Russians began to issue cards of Russian banks with the Chinese payment system UnionPay, which is accepted abroad, for use in foreign countries.
Disconnect with SWIFT
According to European and American officials, one of the steps that should significantly affect the operation of the banking system of the Russian Federation was the exclusion of Russian banks from the SWIFT system. On June 14, 2022, Sberbank, Moscow Credit Bank and Rosselkhozbank were disconnected from the system.
From March 12, 2023, VTB, Rossiya, Otkritie, Novikombank, Promsvyazbank, Sovcombank and VEB.RF will be disconnected from SWIFT.
VTB reported that the SWIFT disconnection will not affect customer service in Russia, but money transfers to individual customers abroad are no longer possible.
The head of the Central Bank, Elvira Nabiullina, said that even after the first disconnect with SWIFT in 2022, the Russian financial system will continue to function smoothly, despite the sanctions. According to him, this will be possible thanks to the Financial Messaging System that will replace SWIFT domestically.
Everyone has it
On 25 February 2023, Tinkoff and Alfa-Bank were included in the 10th EU sanctions package. The EU explains the sanctions against them by their role in the economy, as well as the fact that the sector in which they operate provides a “significant income” to the Russian state: these banks are on the list of systemically important banks. Their foreign assets can be frozen, and Europeans are prohibited from providing them with financing and other economic resources. It is forbidden to trade in Euros. They have also left the SWIFT system.
The EU listing also included companies associated with Alfa-Bank in Cyprus (Alfa Capital Markets LTD), Netherlands (Amsterdam Trade Bank NV) and parent company ABH Holdings (Luxembourg).
It was the first time for Tinkoff to fall under the sanctions. Raiffeisenbank and UniCredit Bank, whose main shareholders are Western banking groups, remain the only credit institutions that are not sanctioned.