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Exclusive: China, UAE, Turkey step up bank scrutiny, Russia struggles to collect oil payments


MOSCOW (Reuters) – Rosneft faces months-long delays in crude and fuel payments as banks in China, Turkey and the United Arab Emirates (UAE) become more cautious about U.S. secondary sanctions, eight people familiar with the matter said.

Delays in payments reduce the Kremlin’s revenue and make it less stable, allowing Washington to achieve its twin policy goals of sanctions – disrupting the flow of funds to the Kremlin to punish it for its war in Ukraine without disrupting global energy flows.

Several banks in China, the United Arab Emirates and Turkey have increased sanctions compliance requirements in recent weeks, leading to delays or even rejections of money transfers to Moscow, according to eight banking and trade sources.

Banks, wary of U.S. secondary sanctions, have begun requiring their clients to provide written assurances that individuals or entities on the U.S. SDN (Specially Designated Nationals) list will not participate in transactions or be the beneficiary of payments.

The sources spoke on condition of anonymity due to the sensitivity of the issue and because they were not allowed to speak to the media.

In the UAE, First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) have suspended multiple accounts linked to trading in Russian commodities, two sources said.

The UAE’s Mashreq Bank, Turkey’s Ziraat and Vakifbank, as well as the Industrial and Commercial Bank of China and Bank of China are still processing payments but will take weeks or months to process, four sources said.

Mashreq Bank declined to comment. FAB and DIB Bank in the UAE, Ziraat and Vakifbank in Turkey, Industrial and Commercial Bank of China and Bank of China did not respond to requests for comment.

Asked about reports that Chinese banks were slowing payments, Kremlin spokesman Dmitry Peskov said there was a payment problem.

“Of course, unprecedented pressure from the United States and the European Union on the People’s Republic of China continues,” Peskov said during a daily conference call with producers.

“Of course this will cause some problems, but it cannot become an obstacle to the further development of our economic and trade relations (with China),” Peskov said.

U.S. executive order

After Russia invaded Ukraine in February 2022, the West imposed a number of sanctions on Russia. It is not illegal to handle Russian oil as long as it is sold below the Western price ceiling of $60 a barrel.

Russia’s oil exports and payments were disrupted in the first months of the war but later normalized as Moscow redirected oil flows away from Europe and toward Asia and Africa.

“Problems have resurfaced since December after banks and companies realized the threat of US secondary sanctions was real,” a trade source said.

The sources were referring to an executive order issued by the U.S. Treasury Department on December 22, 2023, which warned of possible sanctions against foreign banks for evading Russia’s price caps and called on them to strengthen compliance.

It was the first direct warning of the possibility of secondary sanctions on Russia, putting it on par with Iran in some areas of trade.

Following U.S. orders, banks in China, the United Arab Emirates and Turkey that work with Russia stepped up checks, began asking for additional documents and training more staff to ensure transactions complied with price caps, trading sources said.

Other documents can also include ownership details of all companies involved in the transaction as well as personal data of the individuals who control the entities so that banks can check the SDN list for any risks.

In late February, UAE banks were required to step up payments scrutiny because they would be required to provide data to their U.S. counterparts and the U.S. Treasury Department if they had transactions to China on behalf of Russian entities, according to a banking source familiar with the matter. . this matter.

“This means there will be delays in the processing of payments to Russia,” one source said.

One source said one of the payments was delayed by two months, while another said the delay was as long as two to three weeks.

“It has become difficult, even for U.S. dollar trades. Sometimes direct trades of yuan against the ruble take weeks to execute,” one trader said.

(Reporting by Reuters producers in Moscow, Aizhu Chen in Singapore, Engen Tham in Beijing, additional reporting by Ziyi Tang, Florence Tan, Can Sezer, Jonathan Spicer, Federico Maccioni, Nidhi Verma, Hadeel Al Sayegh and Kevin Huang; Editing by David Evans)



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