Under significant U.S. Pressure, Turkish Banks Close Down Russian Accounts

Turkish banks are initiating the closure of accounts held by Russian companies and implementing stricter criteria for new account openings. According to information from business owners involved in trade with Turkey as reported by 'Lenta,' this action is a response to extraordinary pressure from the United States.

Reports indicate that Turkish financial institutions have ceased processing payments from Russia since the start of 2024, and these transactions remain frozen. While the closure of accounts for Russian companies reportedly began in 2022, it gained momentum towards the close of 2023, particularly following a decree by U.S. President Joe Biden on December 22. The decree grants the U.S. Treasury authority to enforce measures against foreign banks supporting transactions for entities sanctioned by Russia.

Photo Credit - Shutterstock

Turkey's banking sector attributes this trend to sanctions and pressure from the U.S. An insider from the Turkish banking sector told RIA Novosti, 'Yes, there are such examples. This is linked to the unprecedented pressure from the U.S.

Presently, the provision of services to corporate clients with Russian ties, irrespective of their registration country, has been suspended, as per Iskander Mirgalimov, a consultant specializing in structuring international payments for Russian businesses. Mirgalimov highlighted that Russian companies are being advised to conclude their dealings with Turkish banks and close their accounts. This particularly impacts businesses that utilized Turkey as a transit point for transactions and supplies, including oil and gas traders.

Since January 1, monetary transfers between the two countries have virtually halted. Turkish banks began distancing themselves from Russian entities due to concerns about potential U.S. sanctions, a decision evident as early as January 17. This involves the termination of correspondent relations and the suspension of payment processing without formal contract closures. However, exceptions are made for "foreign banks' subsidiaries in Russia."

Ekonomim reported that money transfers between the countries had practically ceased since January 1, with Turkish exporters anxiously awaiting decisions to resume trade.

Similar scrutiny of Russian clients is observed in other nations as well. Fearing exposure to U.S. secondary sanctions, state banks in China have intensified comprehensive checks on Russian clients. This applies to at least two financial institutions, aiming to sever ties with clients on the sanctions list. Moreover, these banks will refuse services not only in dollars but also in other currencies to the Russian military industry. They also seek to intensify scrutiny on clients with ties to Russia, encompassing individuals and companies engaged in business or supplying crucial goods through third countries. Chinese state banks took this step following the U.S. Treasury's announcement of its intention to impose secondary sanctions on organizations facilitating Russia's military industry purchases.

Cyprus has adopted a similar approach, where major banks have tightened checks on Russian clients. The largest bank in the country, Bank of Cyprus, began notifying Russian clients about the impending closure of their accounts in early April of the previous year.