The US Treasury has connected to Mir – Newspaper Kommersant No. 230 (7431) dated 12/10/2022

The financial authorities of Kazakhstan reported that representatives of the US Treasury allowed local banks to accept cards of the Mir payment system issued by Russian banks. Experts note that this precedent may contribute to the resumption of acceptance of Russian cards in the near abroad. However, according to payment market participants, the risk of falling under secondary sanctions remains, so it is hardly worth expecting a quick effect from this step of the American authorities.

On Friday, December 9, the Agency for Regulation and Development of the Financial Market of Kazakhstan (formerly a division of the National Bank) reported that regulators received a letter from the Office of Foreign Assets Control (OFAC) of the US Treasury. In it, representatives of the American side explained that they did not object to the use of bank cards of the Mir system by private individuals.

The agency’s website notes that the permit applies to citizens “who migrated from Russia to Kazakhstan to carry out operations that ensure their livelihoods.”

It also reported OFAC’s warning that “transactions with this payment system will remain under special control in order to prevent its use to circumvent anti-Russian sanctions.”

According to a Kommersant source in the payment market, the meeting at which this information was brought to the attention of representatives of Kazakh banks was attended by the heads of the agency and the National Bank. At the same time, the interlocutor of Kommersant said that the letter itself was not shown to anyone – the deputy chairman of the National Bank explained that he could not provide it to credit organizations, because there were questions that did not concern them.

Earlier, the US Treasury warned foreign financial institutions that it is not advisable to cooperate with the Russian payment system, as they “risk supporting Russia’s efforts to circumvent US sanctions” (see “Kommersant” of September 16). As a result, many banks in a number of countries, including those from neighboring countries, announced the suspension of accepting Mir cards. On Friday, a representative of the Central Bank of Uzbekistan said that the issue of resuming work with the Russian payment system Mir is being studied, Prime reports.

At the same time, the representative of the regulator said that the regulator did not receive a letter from OFAC similar to that sent to the National Bank of Kazakhstan.

Meanwhile, Alma Obayeva, head of the National Payments Council, told Kommersant that in November, on the sidelines of a conference in Kazakhstan, she discussed with representatives of the country’s National Bank how they defended the possibility of servicing Russians before US representatives.

According to the FSB of Russia, from July to September, Russian citizens traveled abroad 9.7 million times. RBC. Moreover, Kazakhstan also entered the top three most popular destinations – according to the FSB, from July to September, Russians traveled there almost 1.3 million times. Moreover, the number of departures from Russia to the CIS countries has become a record for five years – in addition to Kazakhstan, these are Armenia, Kyrgyzstan, Uzbekistan, Tajikistan. At the same time, remittances to these countries from Russia increased sharply. The largest volume of transfers fell on Armenia ($2.7 billion). The second place in terms of funds received from Russia is occupied by Kyrgyzstan ($1.76 billion). Georgia is in third place in terms of transfers from Russia ($1.39 billion). According to the National Bank of Kazakhstan, more than $540 million was transferred to the country from March to October.

After the emergence of such a precedent, according to Alma Obayeva, Kyrgyzstan and Uzbekistan, countries where Russians actively left, can follow the path of Kazakhstan. However, for countries like Turkey, “this is not so relevant.” “They could, like Kazakhstan, compete for the opportunity to accept Mir cards, but now they have a different priority – to encourage Russians to use their national means of payment,” the expert believes.

On the whole, however, market participants are cautiously evaluating explanations from the US authorities for Kazakhstani banks. No one limited operations on Mir cards under the sanctions, notes Roman Prokhorov, head of the board of the Financial Innovations Association, and the termination of servicing cards by a number of banks was their own decision, taking into account all the circumstances. “Therefore, this clarification is unlikely to fundamentally change the situation with Mir cards abroad, since there are no prerequisites for reducing the sanctions pressure yet, and a direct ban on cards may be included in the next sanctions packages,” he says.

Alma Obayeva notes that banks are afraid of secondary sanctions not even from the US Treasury, but from other Western counterparties.

Dmitry Vishnyakov, an independent expert in the payment card market, draws attention to the fact that some Mir cards are issued by banks that are under sanctions, and the risks borne by Kazakhstan banks that accept such cards are in settlement transactions and in interaction with such banks. And now every foreign bank will have to answer the question of how ready they are to take the risk of possible violations of US sanctions by accepting Mir cards, the expert notes.

NSPK, which is the operator of the Mir payment system, declined to comment.

Maxim Buylov