24.09.2022
Chicago 11, Melborne City, USA
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Russian banks were allowed to refuse to conduct currency transactions: who does it concern

The new decree of the President of the Russian Federation allows banks to suspend foreign exchange transactions if their accounts have been blocked due to sanctions.

Vladimir Putin’s decree temporarily allows Russian banks to waive their obligations to conduct foreign exchange transactions if their assets have been frozen due to Western sanctions. Moreover, all transfers and issuance of foreign exchange funds can be frozen, but the data restrictions apply only to operations of individual entrepreneurs and legal entities.

In addition to a number of new restrictions, which are provided for by the decree of the President of the Russian Federation, banks get the right to set any fees for currency transfers. That is, their clients will have to deal with even greater financial losses if they work with the currency of unfriendly countries. Moreover, Russian banks get the right not to accrue interest on open foreign currency deposits of legal entities (but this right is also given to them by a recently adopted law).

And companies working with foreign currency accounts will not even be able to withdraw the allowed $5,000 to pay for foreign business trips for their employees – unless, of course, the bank decides to refuse the company this operation.

Fragment of the decree

It is noted that after the entry into force of this decree, clients of Russian banks may receive the right to claim against a foreign bank that froze the assets of a Russian bank. But everyone understands that few people will be able to defend their rights against the backdrop of aggravated relations with Western countries.

Considering that banks have set high commissions for currency transfers before, now we should expect even higher commissions. And if earlier this was the cause of numerous complaints from many citizens and companies, now it becomes clear that inflated commissions are a completely legal measure sanctioned by the Central Bank.

But the same decree notes that Russian companies subject to sanctions can still fulfill their obligations to non-residents on Eurobonds, but not directly. To do this, they will have to open type “D” accounts.

It is possible that these are not the last restrictive measures. Of course, they apply only to the currencies of unfriendly countries: euros, dollars and pounds sterling, and so far only concern corporate clients. And even if the Central Bank announced that there would be no complete devaluation, in reality it turns out a little differently. And if the National Clearing Center (NCC) falls under sanctions in the near future, then new currency restrictions cannot be avoided. Preparations for this have already begun, because the Central Bank is already discussing with market participants the creation of new mechanisms for calculating exchange rates.

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