Many countries have imposed a slew of financial restrictions, including freezing the assets of Russia’s Central Bank, limiting its ability to access its dollar reserves. The US, EU, UK, Canada and Australia have also banned people and businesses from dealing with Russia’s Central Bank, Finance Ministry and the Wealth Fund.
Russian Banks Otkritie, Bank Rossiya, Novikombank, Promsvyazbank, Sovcombank, VEB and VTB have been already removed from the Swift messaging system, which enables the transfer of money across borders. However, the ban stopped short of including those banks handling energy payments. Credit cards issued by Russian banks using the Visa and Mastercard payment systems have stopped functioning overseas after March 9.
Russia has officially become the most sanctioned country in the world. Could it have drastic repercussions for business and what should be noted?
In recent years, Russia has accelerated using its own payment cards, like MIR, and its own version of Swift, SPFS․ MIR system was introduced in Kazakhstan, Kyrgyzstan and Armenia in 2018, and in 2019 in Turkey, and Uzbekistan. In October 2021, MIR was launched in the UAE, Bulgaria and Thailand.
The Central Bank of Russia announced that the Russian banks plan to issue cards using UnionPay (China), enabled in 180 countries. While several Russian banks already use UnionPay, others including Sberbank and Tinkoff, could start issuing cards co-badging Russia’s domestic MIR payments system with UnionPay.
The Ministry of Economy of Armenia has published a guide for Russian, Belarusian and Ukrainian businesses seeking to move to Armenia, suggesting how to register a business, renting an apartment, even how to bring pets across the border. It also has created a working group to answer queries from businesses interested in moving.
Today, many Ukrainian, Belarusian and Russian companies, especially IT companies are considering Armenia as a potential new home. Favorable investment environment, developed banking and legal system, and tax incentives make Armenia an attractive direction.