Chinese Banks Tighten Russia-Related Business Audits

Credit: Visual China

BEIJING, February 20 (TMTPOST) – Since February of this year, China’s commercial banks have been strengthening the audit of remittances involving Russia.

As a result, many foreign trade companies were unable to receive payments due to non-compliance with the bank's audit requirements.

Several bank employees said that since February this year, the scrutiny of remittance receipts involving Russia has become more rigorous. An employee from the International Business Department of Industrial and Commercial Bank of China (ICBC) in Suzhou of Jiangsu province said, "There have been always audit requirements for cross-border RMB-denominated transactions, and currently, the audits are becoming stricter.”

The employee mentioned that unless clients provide comprehensive background information and recipient details, funds cannot be received, and the due diligence process may take a long time.

An employee from a state-owned bank’s branch in Zhaoqing city of Guangdong province said that the bank notified foreign trade clients before the Chinese New Year that it would no longer handle foreign trade transactions involving Russia, as most payments could not be received.

Similarly, the Hangzhou branch of the Shanghai Pudong Development Bank said that Russia-related remittances are not receivable, and even if funds are remitted, approval from the head office is required, with a low likelihood of final success.

According to Nikkei Asia and other overseas media, some global banks have begun to strengthen the audit of RMB funds related to Russia since the third quarter of last year, including Hang Seng Bank and HSBC. They sent letters to clients saying that they would cease to provide remittance services between China and Russia and Belarus for corporate clients due to the increasingly complex regulatory environment.

According to some foreign trade enterprises, with state-owned banks tightening Russia-related business, Zhejiang Chouzhou Commercial Bank, which could previously receive payments, is gradually canceling such services. An employee from the bank's Nanjing branch said that due to regulatory requirements, there has been further tightening of remittance receipts related to Russia recently.

From information gathered, the banks’ tightening of audits of remittances involving Russia have impacted Chinese foreign trade enterprises in Jiangsu, Hunan, Shanghai, and Beijing, among others.

For remittances related to foreign trade orders from countries other than Russia, several bank employees have mentioned that each case needs to be analyzed based on specific circumstances.

Customer service staff from several state-owned banks said that remittances in other currencies from Russia can still be audited and paid according to previous policy requirements, but specific inquiries need to be made to relevant banks.

The latest data from the central bank shows that in 2023, the total amount of cross-border RMB receipts and payments in China reached 52.3 trillion yuan, a year-on-year increase of 24%.

(Note: 1 yuan equals $0.14.)