Financial Services Commission: "Han Suspends Transactions with Russian Banks and Government Bonds"

Government Officially Announces Participation in Russia Financial Sanctions
Supports Russia SWIFT Exclusion Measures

[Image source=Yonhap News]

[Asia Economy Reporter Sim Nayoung] The Financial Services Commission announced on the 1st that it has suspended transactions with seven major Russian banks engaged in the war with Ukraine and strongly recommended that domestic public institutions and private financial institutions halt transactions in the issuance and distribution markets for all newly issued Russian government bonds after the 2nd.

The seven major Russian banks whose financial transactions will be suspended are Sberbank, VEB, PSB, VTB, Otkritie, Sovcom, Novikom, and their related subsidiaries. The suspension timing will be aligned with the U.S. sanctions grace periods set for each bank, and the Korean government will apply the same schedule. However, transactions in sectors and banks for which the U.S. has issued general licenses allowing exceptions?such as agricultural products, COVID-19 medical support, and energy-related transactions?will be permitted under the same standards.

Regarding the suspension of Russian government bond issuance, the Financial Services Commission stated, "Domestic financial institutions should cooperate to ensure thorough enforcement of transaction suspensions with sanctioned banks by fulfilling verification obligations under relevant laws, complying with internal control procedures such as monitoring related financial transactions, and providing prior notice to customers." It also urged, "Unnecessary financial transactions with sanctioned banks, such as those related to existing contracts of export-import companies, should be completed promptly within the U.S. sanctions grace period to minimize unnecessary confusion after the suspension measures take effect."

It added, "The Korean government supports the exclusion of Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and plans to implement this immediately once the European Union (EU) sanctions are concretized." It emphasized, "As soon as the banks subject to SWIFT exclusion and the timing of application are announced, internal control procedures should be followed, and financial transaction monitoring systems should be organized to ensure this measure is effectively enforced both domestically and internationally."

Furthermore, it requested, "Since this is an exceptional measure, financial institutions should be careful to avoid confusion in transactions with customers such as companies and Korean residents abroad." The government also stated, "We will continue to closely monitor the situation in Ukraine and the Russian sanctions imposed by major countries such as the U.S. and the EU, and promptly implement additional sanction measures in line with international community demands."

The government officially declared its participation in Russian financial sanctions on the 28th of last month and decided on the specific scope and method of participation after consultations with the U.S. Department of the Treasury and others.

This content was produced with the assistance of AI translation services.