Russian banks have begun to reinsure themselves when making transfers to China

Russian banks have begun asking domestic importers wishing to send payments to China for a written assurance that the local bank will definitely accept the money and not return it back to the Russian Federation. This reports Vedomosti newspaper with reference to market participants.

According to the sources, Russian financial institutions have begun to use a similar reinsurance scheme against the backdrop of the US Treasury Department’s increasing sanctions pressure on Chinese banks. The latter, given the risk of falling under secondary sanctions from the United States, have recently begun to frequently return payments from Russia back and refuse to conduct trade transactions involving counterparties from the Russian Federation.

The scheme with written confirmation of payment acceptance, as specified, consists of several stages. First, the Chinese supplier contacts the manager of his bank, describes the details of the trade deal and asks whether he will accept the money. Then he passes the received information to the Russian partner, who, in turn, confirms in writing to his bank that the payment will go through. As explained by the head of JSC “First Group” Alexey Poroshin, such a scheme is used only by those financial organizations of the Russian Federation that have the ability to make direct payments to Chinese banks, and not through intermediaries.

Earlier, he spoke about a new problem faced by Russian importers of Chinese products. According to him, recently Chinese banks have begun to refuse to accept funds if Russian names are indicated in payment documents. Similar incidents began to be recorded in July 2024. As a result, importers are forced to prepare a full set of documents for transactions through third parties to conceal ties with Russia. Previously, Georgy Vlastopulo, senior partner of Optimalog, complained that not only large Chinese banks, but also regional ones, began to block settlements with the Russian Federation.