Turkish banks say Russians turned away as sanctions-busting fears raised

Turkey’s banks are resisting some requests by newly arriving Russians to make deposits and transfers for fear of breaking Western sanctions on Moscow for the war on Ukraine, Reuters reported on Friday citing several unidentified sources.

Non-government banks are being particularly vigilant, rejecting some applications and running others through extra layers of compliance to ensure laws are followed, four bankers and two Turkish officials told Reuters.   

Many Russians have arrived in Turkey with wads of cash – Turkey is one of the few countries still allowing direct flights to and from Russia.

"I managed to bring dollars from Moscow and trade them here. But I don't have a card yet," said Filipp Chekhunov, who works in animation and arrived in Istanbul in recent weeks, according to Reuters.

Turkey has refused to follow the lead of Western governments and impose sanctions on Russia, saying such measures are not the way to resolve the war in Ukraine. The government’s stance has raised concern among some investors that Russia will use Turkey to bypass Western sanctions.

“The West needs a clear-eyed approach to Turkey if it is going to succeed in cutting off Russia from financial flows, markets and trade. It is pretty clear that Russia will, and indeed is, using Turkey,” Tim Ash, a senior emerging markets strategist at BlueBay Asset Management, said in e-mailed comments this week.

Turkish President Recep Tayyip Erdoğan has established close relations with President Vladimir Putin over the past few years. The two leaders cooperate in Syria, and speak on the phone and meet regularly. Erdoğan has bought Russian S-400 air defence missiles from Moscow, prompting the United States to impose sanctions on the Turkish defence procurement agency and bar the country from a programme to develop and purchase F-35 stealth fighter jets.

Maria, a 33-year-old Russian working in the film industry, said she had faced difficulty buying a cup of Turkish tea after trying to use her Visa card.

"I tried to pay for my tea at a café, but the payment was denied," she said, declining to give her last name citing safety reasons.

"The waiters looked at me with sympathy, shook their heads and said: 'You are Russian!'"

Private banks are very careful about new Russian deposits and are afraid of sanctions, one senior banker said on condition of anonymity.

"The problem is not opening an account but rather how will the money come and what will happen if any sanctions come," the person said. "Banks are very careful in terms of new accounts."

The country’s banking regulator said it was closely following sanctions on Russia but added that "our organisation does not have any instructions to limit citizens of any country that is not in the scope of sanctions decisions".

Three Turkish banks are accepting the Russian Mir payment system: private lender İşbank and large state-run banks Vakıfbank and Ziraatbank.

The revenue from transactions via Mir for these three banks increased exponentially after Visa and MasterCard's pullout from Russia, one Turkish banker told Reuters.

"However, they face some hurdles to collect these revenues from the Russian side due to capital controls and other restrictions" in the fallout from sanctions, said the banker, who asked to remain anonymous.

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