Russia and Ukraine to be divided by financial 'iron curtain'

 Russia and Ukraine to be divided by financial 'iron curtain'

Russian President Vladimir Putin has signed a law today which bans money transfers to Ukraine via foreign payment systems. 

The document has been published on the official Internet portal of legal information of the Russian government.

According to the documents attached to the law, the restrictions concern only to transfers, which are conducted without opening a bank account.

The law will come into effect 30 days after the official publication.

The amendments to the Law on the National Payment System stipulate that if a foreign state introduces a ban regarding payment systems, the operators of which are registered with the Central Bank of the Russian Federation, in this case cross-border transfers can only be made through an operator controlled by a Russian legal entity.

Advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking to Vestnik Kavkaza, noted that this ban does not mean that now it is impossible to transfer money from Russia to Ukraine. "Bank transfers are still allowed. This ban will be an additional incentive to open a bank account and carry out normal bank transfers. Thus, the control over the movement of funds will be increased," he said.

In particular, citizens of Ukraine will no longer be able to anonymously send large sums of money to their homeland. "There are norms that allow representatives of the bank to ask for proving a source of funds if transferring a large sum of money. This applies for amounts larger than $10 thousand. By the way, many banks offer a money transfer service much cheaper than payment systems, so this restriction is unlikely to cause real damage," Sergey Hestanov stressed.

An associate professor of Stock Markets and Financial Engineering of RANEPA, Vasiliy Yakimkin, in turn, expects that it will be more difficult for citizens of Ukraine to send money to their homeland. "They can still transfer money through Belarus, carry cash themselves or through friends. But the overhead costs for transactions will rise by about 30-40%, this money will be lost by those Ukrainian citizens who work in Russia and send funds to their families in Ukraine," he noted.

At the same time, for the Russian financial system this ban is rather beneficial. "The Ukrainians sent about $6 billion a year to their home. Due to the fact that they used foreign payment systems, in particular WebMoney, our systems were not used. Now the banking system will try to benefit from it. And if it turns out to be too expensive to transfer through banks, then the Ukrainians working in Russia will have to carry money themselves with great risk," Vasily Yakimkin concluded.

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