The HSBC (LON:HSBA) banking group will suspend transactions for legal entities from Russia and Belarus starting October 27 due to the "complication of a regulatory landscape" in the international financial sphere. The decision is aimed at minimizing operational susceptibility to risks in these two countries, even in areas where money transfers are allowed by law, according to an internal mailing for clients cited by the Japanese newspaper Nikkei on Friday.
"The ongoing conflict in Ukraine has resulted in an unprecedented volume of sanctions and trade restrictions imposed against Russia and Belarus," an HSBC representative said on Friday. He added that while HSBC has taken "multiple steps to comply with applicable regulatory obligations, it has become increasingly challenging to operationalize these complex restrictions globally."
Russia and Belarus have faced a series of Western sanctions following Russia's assault on Ukraine, which began in February 2022. Shortly after the invasion, the EU, the US, and other Western partners severed a number of Russian banks from the Swift global interbank payments system, restricting their access to financial markets worldwide.
In July 2022, over alleged contributions to the war, the US added more than 120 companies from Russia to its sanctions blacklist. These measures were designed to obstruct Moscow's access to products supporting its military efforts, undermine its energy capabilities, diminish its access to the international financial system, and starve Russia of G7-produced technology.
In August 2022, Citigroup (NYSE:C) announced plans to wind down its consumer and local commercial banking business in Russia and anticipated to incur about $170 million in costs over the next 18 months. A number of companies also closed their operations in Russia last year following sanctions imposed by Western countries on Moscow.
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