U.S. Treasury's OFAC bans non-U.S. payment system operators from servicing cards of Russian sanctioned banks in U.S.A

MOSCOW. April 21 (Interfax) - The United States Department of the Treasury has warned the operators of non-U.S. payment systems about evading the sanctions of the Treasury's Office of Foreign Assets Control (OFAC) regarding the cards of Russian banks included in the SDN List being used in the United States, according to an advising clarification published on the department's website.

"Non-U.S. payment processors whose cards are issued by sanctioned foreign financial institutions may also be in violation of OFAC sanctions rules if they allow the use of these cards in the United States," according to the clarification.

The OFAC also prohibits the operators and acquirers of U.S. payment systems from processing transactions on cards issued by sanctioned Russian banks. The ban is non-applicable only in cases when there are exceptions or permissions from the OFAC.

The OFAC has urged U.S. citizens, including payment processors and acquirers, to exercise caution when dealing with foreign payment processors that are known to service cards from banks designated in the sanctions list, and whose cards are accepted in the United States. As an example of such prudence, the OFAC cites checking bank identification numbers (BIN) associated with sanctioned banks and disabling those BINs from operating in the United States. The operators of non-U.S. payment systems are also required to prevent the use of cards of sanctioned banks in the U.S. at the network level.

On the night of March 6, the international payment systems of Visa and MasterCard simultaneously announced the termination of operations on the Russian market owing to Russia having launched its special military operation in Ukraine. Later, the Japanese payment company, JCB, and American Express announced the suspension of operations in Russia. The cards of these payment systems issued by Russian banks are not accepted for payment abroad and/or in foreign online stores. In Russia, cards issued by foreign banks have stopped being accepted.

The cards of international payment systems issued by Russian banks do continue to operate as usual domestically, given that Russia's National Payment Card System (NPCS) has processed local transactions since 2015.

A number of large Russian banks, including Sberbank , VTB , Otkritie, Promsvyazbank , and Alfa Bank, have come under blocking sanctions in February to April 2022. The sanctions have frozen the assets of the said financial institutions in the United States, as well as have banned U.S. citizens from conducting any transactions with the banks.