Chinese banks are closing Russian business accounts

Chinese banks have begun purging themselves of Russian clients, closing company accounts left right and center, blocking payments, and refusing to process even the most simple operations, such as currency conversion, Skymax managing partner Igor Shibanov told RIA Novosti.

According to Shibanov, who works both in mainland China and in Hong Kong, the problems began roughly one and a half years ago. Initially, companies that were placed on the US and EU sanctions lists were at risk, but now the banks consider all Russian business “toxic”, and are blocking corporate transfers and even the cards of physical entities.

“It’s still possible to open a company, but it’s no longer possible to open a bank account with a Russian passport. If the founder or director is a Russian citizen, there are no options here,” Shibanov complains.

At first, the banks cleaned out all the newer companies that had been around for less than a year. “You have one week, withdraw your money, close the accounts,” Shibanov describes the typical situation. “Without any explanation of the reasons, we weren’t given any information.”

Three year-old companies were next, he says.

“Suppose the bank calls the phone which is indicated for contacts if the person has not answered – everyone’s accounts have been blocked at once, and can no longer be unblocked. They gave time to withdraw money and everything. I had accounts of 10 year-old companies, and they assured me that there definitely wouldn’t be any problems with these companies. I went to the bank, they knew me there, understood that it wasn’t any old ‘dumpster’, but in the end, money stopped clearing into the account,” Shibanov recounts.

According to him, attempts to contact the bank’s managers are futile: “You can’t get above a certain  level, and on the level we could get to, we were told, ‘we are fighting against money laundering, your country is in the risk group, which is why we have made such a decision’.”

Even Russians with personal accounts are having problems with Chinese banks. “At the moment it is not infrequent for even our tourists to have difficulties. This happened with several of my guests, when a person who came to China on a tourist visa was unable to exchange money at the bank. That is, he goes to the bank with dollars, but the moment they see the Russian passport, they kick him out. These are state Chinese banks,” the businessman adds.

The Central Bank of Russia is also having issues, head of the bank’s Chinese office Vladimir Danilov admitted in September.

“The problems are related to several Chinese banks’ expanded interpretation of third countries’ restrictive measures,” Danilov said at the “Russian-Chinese financial collaboration as a factor of economic development” round table in Harbin.

Even companies that are not under sanctions have their transactions blocked, which “leads to delays when paying the clients of Russian banks, and even in counter-payments in favor of Russian companies”.

In addition to corporations, banks are also having trouble opening correspondent accounts in China, explained Anatoly Kozlachkov, vice president of the Association of Banks of Russia.

“These problems are understandable, they are related to the sanction pressure,” he observed, emphasizing the need to find ways to deal with the issues.

  China, Russia, Central Bank of Russia