Visa, MasterCard Freeze Cards at Sanctioned Russian Banks

Published: March 21, 2014 (Issue # 1802)

US-based Visa Inc. and MasterCard Inc. have stopped processing payments by cardholders at Russian banks targeted by the United States for financial sanctions on Thursday, a number of Russian banks said Friday.

The news signaled the first impact on ordinary Russian citizens by a series of Western sanctions against Russia over the ongoing crisis in Ukraine, the greatest geopolitical showdown between Russia and the West since the end of the Cold War.

Earlier sanctions had been restricted to targeting high-level officials.

At least three banks by Friday afternoon had reported that customer cards were no longer being accepted for purchases online or at retail outlets. Customer deposits remained unaffected.

Rossiya Bank, the only bank named in expanded US sanctions Thursday, was first to report the news.

“The management of Rossiya Bank understands the difficulties experienced by clients in this situation, and assures them that everything possible is being done to help,” Rossiya Bank said in a statement on its website.

The bank added that customers could still withdraw cash from the bank’s ATMs without difficulties, as well as those owned by partner banks.

Sobinbank, part of the Rossiya banking group, said that its call centers had been swamped by customers who were abroad and suddenly found their cards were not working.

Also affected was the Russian SMP Bank, majority owned by brothers Arkady and Boris Rotenberg, who were named as individuals in the US sanctions list.

“All other operations, including the issuance of deposits and making payments remain unaffected and without any restrictions,” SMP Bank said in a statement, adding that it has no assets in the United States.

The US and EU announced asset freezes and travel bans targeting a number of Russian officials close to Putin on Monday, following a referendum in Crimea that saw voters overwhelmingly support reunification with Russia after 60 years as part of Ukraine.

Those lists were expanded – including the addition of the Rossiya Bank to the US list – following the ratification of the reunification treaty by Russia’s parliament Thursday.

Russian President Vladimir Putin warned earlier this month that sanctions against Russia threatened to cause mutual damage in the modern, integrated global economy.

Leaders in Crimea refused to recognize the legitimacy of the government in Kiev that came to power amid often violent protests last month and sought reunification with Russia.

Leave a comment