Russian Businesses in the UAE Will Have to Find an Alternative to Banque Misr
Freeze on dollar transactions
The freeze on dollar transactions at Banque Misr’s UAE branches may create additional difficulties for Russian companies working with banks in the Emirates. The situation is linked to an investigation into the bank’s branches amid US sanctions and money-laundering allegations.
This was reported by Kristina Tantsyura, CEO and Managing Partner of SKY Consulting Group, an expert in business development in the Middle East and Head of the UAE and Persian Gulf Countries Committee of the Association of Exporters and Importers.
According to her, Banque Misr’s UAE branch was one of the banks most frequently used by Russian companies engaged in trade operations.
“This was partly because the bank continued to accept payments from Russia for quite a long time and was highly loyal to companies with Russian owners and to the export and import operations they conducted.”
She added that a large number of Russian companies registered in the UAE held accounts with Banque Misr. According to the expert, dollar transactions have now been frozen for the duration of the investigation into the bank’s UAE branches.
“That means at least a month-long freeze on virtually all international settlements through this bank, as it primarily handled dollar transactions.”
As a result, UAE-based companies that worked with Banque Misr will have to look for alternative banking solutions. At the same time, the expert notes that opening a new bank account in the UAE can take a considerable amount of time.
“Unlike Russia, where companies can use different banks for their payment operations, opening a bank account in the UAE is not that straightforward. Sometimes it takes weeks to open a new account, and sometimes even months.”
Tantsyura believes that the situation involving Banque Misr will not bring the activities of Russian entrepreneurs in the UAE to a halt. However, it may lead to more serious consequences for banking regulation.
“But there is another very important point to understand. The UAE monitors money laundering very closely. Therefore, following the US allegations, the UAE Central Bank also became involved in the investigation and launched its own review,” the expert emphasized.
In her view, this may result in tighter controls over banking operations. For businesses, this will mean more inspections and additional requests from banks.
“For ordinary businesses, this means that there will be more checks, banks will request more documents for each payment, and they will do so more frequently.”
At the same time, the expert believes that tighter controls are consistent with the UAE’s efforts to increase the transparency of economic activity. However, for Russian companies, this may reduce the country’s attractiveness as a platform for export-import operations.
“The Emirates are once again demonstrating their ambition to be the most transparent country in all areas of economic activity.
“But if the UAE was previously a comfortable and convenient jurisdiction for certain purposes of Russian businesses, particularly in terms of the ease of export-import operations, it is now beginning to lose this position,” Tantsyura concluded.
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