Exclusive-ECB tells banks to keep tabs on all Russian customers as sanctions broaden net sources By Reuters

© . FILE PHOTO: The headquarters of the European Central Bank (ECB) is pictured in Frankfurt, Germany, Sept. 3, 2015. REUTERS/Ralph Orlowski By Francesco Canepa and Jesús Aguado FRANKFURT/MADRID () – European Union regulators have ordered some banks to trade to be investigated by all Russian and Belarusian customers, including EU residents, to ensure they are not being used to circumvent Western sanctions against Moscow, three sources told . The instructions from the European Central Bank (ECB) supervisors mean that tens of thousands of Russians and Belarusians living in the EU are under intense supervision by their banks, which are on the lookout for large payments and deposits, as well as new credit applications, the sources familiar with the matter said. While EU sanctions against Moscow exempt people with temporary or permanent EU residence permits, they impose a number of restrictions on Russian citizens’ access to banking services, including preventing banks from accepting deposits of more than 100,000 euros ($110,000) from Russian banks. nationals or entities. The ECB’s move will even put EU residents under closer scrutiny and would make it more difficult for them to manage bank accounts, with one source saying some were already facing restrictions in Spain. This follows Moscow’s invasion of Ukraine, which the Kremlin describes as a special operation to demilitarize and “denazify” the country. The ECB checks that the banks it supervises have “made the necessary arrangements to comply with the sanctions”, including with regard to transactions and customer relations, but has not issued any directive going beyond EU rules , a spokesman for the Frankfurt-based central bank said. Some of the ECB’s joint supervisory teams, including central bank staff and national authorities, have ordered banks to tighten controls on EU residents too if they come from Russia or Belarus, according to the three sources, from banks and watchdogs. . While it is not the ECB’s role to impose sanctions, regulators are concerned that banks in the bloc could face hefty fines if their customers transfer money on behalf of sanctioned individuals, two of the sources said. Regulators notified the affected banks between late February and early March and gave them a week to comply, two of the sources said, and an audit of responses is planned. It was not immediately clear when this would be ready. “At first the measures were aimed at those of Russian nationality, whether they were residents or non-residents, and later they were extended to Belarusians,” said one of the sources. Most Russians living in the EU live in Germany, where there are more than 230,000, according to Eurostat, followed by Spain, with more than 81,000. Other popular places are France, Italy, Latvia, Czech Republic, Austria and Finland. Belarusians living in the EU are mainly located in Germany, Lithuania and Italy, Eurostat data shows. ‘EXISTING RISKS’ In one case, a Spanish bank has placed around 8,000 Russian customers not on the EU sanctions list who live in Spain under supervision, one of the sources said. All new loans to Russians who do not have Spanish residence permits have been halted and at least one bank is not allowing non-resident Russians to open new accounts, she added. Italian banks also monitored all accounts of more than EUR 100,000 from Russian customers, even if they lived in the EU and were not on the sanction list, a fourth source familiar with the situation said. Asked if lenders are stepping up their supervision of Russian customers, the Bank of Spain told that both regulators and banks were “performing the necessary checks to assess the situation and the possible existing risks”. The Bank of Italy declined to comment. While the affected banks will not have to stop the transfers, the first three sources said they would need to conduct additional checks to determine the money’s source, destination and purpose. Regulators also told banks to be extra careful with credit applications from Russians or Belarusians, they added. However, one of the sources said nothing is stopping banks from extending credit to an established Russian customer who is not subject to sanctions.

Leave a comment