8 Sep 2023 17:58

HSBC to stop providing money transfer services inside Russia and to Belarus for its corporate clients

MOSCOW. Sept 8 (Interfax) - The British banking group HSBC will stop providing funds transfer services to corporate clients in Russia and Belarus from October 27 due to sanctions imposed against these countries during the military operation in Ukraine, Nikkei Asia reports.

The group, which includes Hong Kong's Hang Seng Bank, sent a letter to corporate clients notifying them it would stop processing payments as of October 27 amid an "increasingly regulatory environment."

The letter, seen by Nikkei Asia, states that the decision was made to minimize operational risks to Russia and Belarus, despite the fact that the activities referred to are permitted by laws and regulations. HSBC corporate clients in Hong Kong were able to make and receive payments from Russia even after the UK and EU had imposed sanctions against Russia.

HSBC Bank confirmed to the publication that it will limit commercial payments to Russia and Belarus. While HSBC has taken many steps to comply with regulatory obligations, it has become more difficult to impose the restrictions around the world, an HSBC spokesman told Nikkei Asia. Hang Seng Bank and HSBC Group did not respond to requests for comment.

A business executive who does business with companies in Russia told the publication that a blanket ban seems excessive because there are some types of commercial activity that are not subject to Western sanctions. "This will only push Russian companies elsewhere. And it will further affect the attractiveness of Hong Kong as a global business center," he said.

HSBC said it still expects to complete the sale of its Russian business to Expobank this year, but the deal is still awaiting approval from local regulators. The group's operations in Russia are primarily related to corporate banking services, including lending and investment banking. HSBC said the new restrictions on money transfers were not related to the upcoming sale.

The Hong Kong Monetary Authority has previously said that financial institutions are not required to comply with unilateral sanctions imposed against Russia, and the decision is in line with the city government's position. Representatives of the regulator, in response to a request from Nikkei Asia, reconfirmed their position.

HSBC's letter to clients came after U.S. Treasury officials met with representatives of the financial services industry in China in June, urging them to help stop the export of advanced American-made technology from Hong Kong to Russia. Department officials told banks they should strengthen due diligence on transactions involving goods included in the export control list, the newspaper said.