Russian banks added to the SDN list – Finance – Kommersant

The US authorities have added a number of Russian banks to the SDN list. Middle-level banks, including regional ones, have been added to large credit organizations that have long been present in it. At the same time, Washington does not give any detailed reasons for their falling under sanctions, noting only that medium-sized banks often help other market participants bypass restrictions. A number of new defendants in the list have already stated that they have no assets in the United States – the payment system of the Russian Federation is actually isolated from the dollar zone anyway. But at least some of the banks had correspondent accounts in the US. Also, the relations of SDN-list participants with banks from other countries may be complicated, there is a risk of disconnecting them from SWIFT.

US Treasury today replenished blocking list (Specially Designated Nationals List – SDN-list) by 11 private Russian credit institutions at once. These included: Credit Bank of Moscow (MCB), Metallinvestbank, SDM-Bank, Lanta-Bank, Levoberezhny Bank, UBRD, Primorye Bank, as well as caught on the same day, under British sanctions, MTS-Bank, Uralsib, St. Petersburg and Zenit. The list also includes financial companies from the Veles group.

Among the new players on the list, only one bank is in the top 10 (MKB), and some, such as Lanta-Bank and Primorye, are outside the top 100 in terms of assets. As explained in US Department of the Treasury messagethe fact is that sub-sanctioned structures are “turning to smaller banks” and asset management companies in an attempt to circumvent restrictions.

Any legal entities that are directly or indirectly owned by 50% or more of sanctioned entities are also blocked. However, all transactions by (or through) US or domestic persons that are related in any way to blocked items are prohibited, except as permitted by a license issued by the Office of Foreign Assets Control. The restriction applies, among other things, to any provision of funds, goods or services to or from a blocked person.

At the same time, the US Treasury gave a deadline for curtailing activities with nine banks (except for MTS Bank and Levoberezhny Bank) until May 25.

Washington does not provide more detailed reasons for falling under the sanctions of these particular banks. Sergey Glandin, a partner at the NSP law firm, explains that on February 22, the US Treasury “determined that from now on the entire Russian financial sector will be the target of sanctions, after which detailed explanations for inclusion in the sanctions lists are not required.” According to the lawyer, the United States is already “acting in the style of Russian roulette”: “any bank, insurance or other company from the financial sector” can get into the SDN list.

SDM Bank emphasized that it “specializes in servicing small, medium-sized businesses and individuals from the very beginning and has always strictly followed international standards for the provision of banking services, including in the face of constant changes that have taken place in recent times.” UBRD only clarified that the bank “has no assets and liabilities in the United States, it does not conduct financial transactions in the territory of this country.” The IBC also notes the absence of assets, balances on correspondent accounts or nostro accounts in the United States. Bank Saint Petersburg “in addition to the British sanctions, are also studying the details of the US sanctions imposed, as well as their possible impact on foreign exchange payments.”

At the same time, according to open data, a number of the banks that fell under the sanctions have dollar correspondent accounts. In particular, Metallinvestbank’s correspondent bank in dollars is the Kazakh First Heartland Jusan Bank (the intermediary is the American The Bank of New York Mellon), Uralsib and St. Petersburg opened accounts with The Bank of New York Mellon, Lanta-bank and Levoberezhny bank – in Raiffeisen Bank International, SDM-bank has an account in the New York branch of Deutsche Bank Trust Company Americas.

As Sergey Glandin notes, being on the US SDN list can also lead to disconnection from the SWIFT financial messaging system and its analogues: “Despite the fact that SWIFT is a Belgian legal entity, the company does not want to become a violator of the US sanctions regime.” Sberbank, VTB, FC Otkritie, Promsvyazbank, RSHB, Sovcombank, Rossiya Bank, MKB, Novikombank have already been disconnected from SWIFT. Against this background, Russia is expanding its own financial messaging system. As noted by the head of the Central Bank Elvira Nabiullina, by the end of 2022, its traffic has grown by almost a quarter. In 2023, the number of participants is expected to reach 18 countries.

According to Mr. Glandin, getting into the American black list also threatens to lose relations with banks from third countries, which will be afraid of secondary sanctions, and may lead to the blocking of dollar payments by ordinary legal entities and individuals that have already been sent to other foreign banks.

At the same time, not all foreign partners react sharply. Thus, according to the UAE news agency, the Central Bank of the country today considered a statement on a new package of sanctions against the Russian Federation, including those imposed on MTS Bank. The financial regulator notes that the license for a Russian bank to open a branch was issued in accordance with approved procedures, including reviewing its AML/CFT policy. At the same time, MTS Bank “contributed to supporting legitimate trade between the two countries and serving the Russian community in the UAE.” The UAE Central Bank is “exploring the options available regarding the status of the new bank and will make an appropriate decision in due course, taking into account the commitments made by the branch during the previous period.”

Olga Sherunkova