HSBC steps up screening of Russian customers worldwide as sanctions escalate


The HSBC bank logo is seen in the Canary Wharf financial district in London, Britain March 3, 2016. REUTERS/Reinhard Krause

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  • HSBC applies stricter scrutiny to Russian-related activities
  • Managers ordered to refuse new loans, source accounts
  • Crackdown comes as US and EU sanctions bite

HONG KONG/LONDON, March 25 (Reuters) – HSBC (HSBA.L) is avoiding potential Russian customers and denying credit to some existing customers, two sources with knowledge of the matter told Reuters, as the bank seeks to protect themselves from Western sanctions. against Moscow.

The measures affect HSBC’s retail and business customers around the world and go further than the bank’s previously stated intentions to end its relationship with lenders such as VTB (VTBR.MM), which have been subject to Western restrictions after Russia invaded Ukraine on February 24. read More

The moves by Europe’s second-largest bank show how sanctions targeting Russia’s financial system and its political and business elite are also ensnaring Russian nationals outside the country as lenders seek to avoid falling under the blow of restrictions and potentially hefty fines.

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HSBC had said on March 14 that it was “not accepting any new business in Russia”, without specifying what this means for existing or potential Russian customers in other markets.

The sources said the bank’s risk and compliance staff instructed business leaders to apply additional scrutiny to any potential customers carrying Russian passports or providing Russian addresses, which resulted in that many more are refused than in the past.

Checks also extend to dual passport holders as well as those with ties to Belarus, seen as an ally of Moscow, as bank staff scramble to ensure they do not inadvertently offer services to sanctioned individuals or companies.

HSBC declined to comment.

Customers with business ties to Russia who receive income in rubles, such as those who derive income from Russian employment, pensions or investments, are also affected as these ruble cash flows are reduced to zero. for credit purposes, one of the sources, who works at HSBC, told Reuters.

Business customers with ties to Russia, even those unrelated to sanctioned entities or individuals, are subject to increased scrutiny for large deposits or withdrawals and see new loan applications denied, the two sources said.

The invasion has triggered an exodus of foreign businesses from Russia as Western authorities deploy sanctions on an unprecedented scale and pace to squeeze Moscow and prevent the global financial system from being a conduit for Russian money.

Reuters reported earlier this month that European Union regulators had asked some banks to step up screening of all Russian and Belarusian customers, including EU residents, to ensure that they are not used to circumvent sanctions. Read more

Russia calls its actions in Ukraine a “special operation” to demilitarize and “denazify” the country.


Major European banks such as Italy’s UniCredit (CRDI.MI) and France’s Societe Generale (SOGN.PA) have said they could face a multi-billion dollar write-off of their Russian business, but banks are also facing a greater downturn in business as they fight sanctions. Read more

HSBC does not operate retail banking in Russia, but as of February 22 it had about 200 employees serving multinationals, its chief financial officer Ewen Stevenson told Reuters at the time. The bank said on March 14 that its activity there “will continue to decline.”

HSBC’s latest measures go beyond the usual background checks and show how banks’ policies continue to evolve since the invasion as they attempt to implement multiple waves of sanctions without discriminating against legitimate customers.

They also show the tension between banks’ sanctions and compliance teams, who are demanding the strictest possible interpretation of the new rules to satisfy regulators, and front-line staff tasked with growing the business and serving customers. .

HSBC is under particular pressure to show regulators it can identify illegal transactions. It had to tighten its global money laundering controls after a string of past scandals and in 2012 agreed to pay US authorities $1.9 billion for allowing itself to be used to launder money. drug money flowing out of Mexico.

HSBC is screening all existing private and retail banking customers with Russian connections globally to see if they have ties to sanctioned entities or individuals, the sources said.

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Additional reporting by Vidya Ranganathan in Singapore. Editing by Jane Merriman and Carmel Crimmins

Our standards: The Thomson Reuters Trust Principles.

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