Russia vows to continue expansion of Mir bank cards after new US sanctions

Russia vows to continue expansion of Mir bank cards after new US sanctions

The national flag of Russia flies over the headquarters of the Central Bank in Moscow, Russia, on March 29, 2021. The sign reads: “Bank of Russia”. REUTERS/Maxim Shemetov

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LONDON, Sept 16 (Reuters) – Russia’s central bank pledged on Friday to continue to expand the number of countries accepting its Mir bank cards following fresh U.S. sanctions against individuals and entities accused of helping Moscow circumvent financial sanctions.

The United States on Thursday sanctioned the chief executive of the National Card Payment System (NSPK) of the Bank of Russia, which runs Mir, saying it seeks to hold the Russian government accountable for the Feb. 24 invasion and ongoing war against Ukraine. read more

“Russia has struggled to find new ways to process payments and conduct transactions,” the US Treasury Department said. “Directly and indirectly, Russian financial technocrats supported the Kremlin’s unprovoked war” against Ukraine.

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The importance of Mir cards for Russians has increased significantly this year after US payment companies Visa Inc. (VN) and Mastercard Inc. (HUMAN) suspended operations in Russia, and their cards issued in Russia stopped working abroad.

Cuba, South Korea, Turkey, Vietnam and several former Soviet republics are adopting Mir, which means both peace and peace in Russian, and others such as Iran intend to follow suit soon.

The NSPK and Mir themselves are not subject to sanctions, and US analysts say US actions are intended to prevent them from being used to evade US sanctions, not to prevent Russian tourists from paying their hotel bills abroad. .

The Central Bank said that Mir cards and other NSPK services will continue to operate in Russia as usual.

“Foreign partners themselves decide to open their infrastructure for accepting Mir cards,” the Central Bank said. “At the same time, we intend to continue the dialogue on expanding the geography of accepting Mir cards.

The US Treasury Department said it had blacklisted 22 people, including four financial executives, whose actions could support Russia’s war effort by helping it evade financial sanctions imposed on Russia after its invasion of Ukraine.

The top four included the head of the NSPK Vladimir Komlev.

“Russia created its own state-owned card payment system in 2014 out of fear of US and European sanctions,” the Finance Ministry said in a statement. “In his role, Komlev promoted the Mir network in other countries, which could ultimately help Russia bypass international sanctions.”

The Treasury Department said that “non-US financial institutions that enter into new or expanded agreements with the NSPK risk supporting Russia’s efforts to circumvent US sanctions by expanding the use of the MIR national payment system outside the territory of the Russian Federation.”

This means that existing limited agreements with NSPK, such as those that allow Russian tourists to pay their hotel bills abroad, are unlikely to violate US sanctions, analysts say.

“They must have some indication, whether diplomatic or intelligence, that Russia is seeking to link its domestic payment system to the international one in order to evade sanctions,” said Brian O’Toole, a former Treasury official who is a research fellow based in Washington, DC Atlantic Council Think Tank.

“I don’t think the administration is particularly concerned about Russian tourists visiting Turkey and paying their hotel bills,” he added.

The NSPK did not immediately respond to a request for comment.

Moscow says what it calls a “special military operation” in Ukraine was necessary to prevent its neighbor from being used as a platform for Western aggression and to protect Russian speakers. Kyiv and its Western allies dismiss these arguments as unfounded pretexts for an aggressive imperial-style war.

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Reuters message; Editing by Kevin Liffey and Cynthia Osterman

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