Translated material
It has become difficult for Russia to carry out settlements with Arab banks after new sanctions
Russian banks spend on average up to two weeks for settlements with credit institutions of the United Arab Emirates (UAE). Payment processing times have increased dramatically due to new US sanctions. RBC writes about this.
The average payment processing time in January-November from Russia to the UAE increased by 29% compared to the same period last year, calculated Vadim Filatov, co-owner and deputy director of the PEK transport company. He added that the time it takes for the funds to arrive depends on the bank: the money can arrive from two to 14 days in different cases.
The processing time for payments between Russia and the UAE has been increasing throughout 2024, notes Ivan Tikhonenok, head of the banking group at the law firm Amond&Smith. According to him, at the beginning of the year one payment could be processed in up to three days, and by the summer the waiting period increased to a week or more. In addition, Arab banks have stopped accepting money for several categories of goods at once - electronics, IT services and industrial equipment.
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Managing partner of Popravko, Derevenko and Partners Svetlana Derevenko noticed that the situation with the delivery of payments began to deteriorate from the end of November. It was then that the US Treasury imposed sanctions against Gazprombank, the last major Russian bank that had managed to avoid restrictions on international transactions since the start of the war in Ukraine.
Derevenko said that Arab banks can return funds to the Russian side after one or two weeks. In some cases, funds were debited from a bank account in the UAE at the end of November, but have not yet reached the Russian counterparty. Managing partner of the Turkish LWM Lenar Rakhmanov notes that sometimes the payment can take a whole month.
Some Russian companies lost the opportunity to directly pay UAE banks back in 2022. As a rule, they look for intermediaries to complete transactions. Other Russian companies did not feel any restrictions at all, even after the introduction of November sanctions. “In practice, this depends on the nature of the transactions performed and on the specific bank in the UAE,” concluded Ekaterina Smolovaya, head of tax practice at CLS.
In early December, China began blocking payments from Russian banks that were subject to new sanctions by the US Treasury. For example, the oldest Chinese bank, Bank of China, stopped any transactions with the Russian side. The Izvestia newspaper clarified that problems with payments are interconnected with problems in the supply of imported goods from China.
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