Banks insist they must abide by their legal and regulatory obligations, including those concerning compliance with Western sanctions on Russia — which currently occupies parts of Ukraine…reports Asian Lite News
Banks are forcibly closing the accounts of British firms that trade with Ukrainian counterparts due to concerns over Russian sanctions and money laundering, business leaders have warned, hampering wider efforts to support Ukraine’s war-ravaged economy.
In a letter to U.K. Treasury Minister Andrew Griffith British-Ukrainian Chamber of Commerce (BUCC) Co-Chair Bate Toms said British firms are increasingly “afraid to trade with Ukraine from the U.K.” due to the risk of being de-banked.
The letter, dated July 26 and also copied to U.K. Business and Trade Minister Nusrat Ghani, states the BUCC has received multiple complaints from firms who have had bank accounts closed — or their attempts to set up accounts rejected — because of dealings in Ukraine.
“Conducting even one Ukrainian transaction can lead to an account being closed,” Toms wrote. “U.K. banks generally refuse to open accounts if any Ukrainian trade is contemplated.”
Banks insist they must abide by their legal and regulatory obligations, including those concerning compliance with Western sanctions on Russia — which currently occupies parts of Ukraine. Transactions with non-government-controlled regions in Ukraine are complex, banks argue, and delays can occur while checks are completed. They insist trade with Ukraine is not prohibited outright, Politico reported.
Toms, however, wants the government’s recently-launched review of the de-banking of Politically Exposed Persons (PEPs) — triggered by former Brexit Party leader Nigel Farage’s dispute with luxury bank Coutts — to also consider how British banks are handling business transactions with Ukraine.
“If trade from the U.K. with Ukraine is not possible for SMEs [small and medium-sized enterprises], the U.K.’s and Ukraine’s economies will suffer, harming Ukraine’s ability to fund its defense and making Ukraine even more dependent on foreign assistance,” he warned.
Toms’ letter notes that “decades ago,” Ukraine had been designated by British banks as a “risky jurisdiction for their customers to do business with” — but insists that “Ukraine has since greatly improved its rule of law.”
U.K. banks’ interventions are “having a big impact on all of us who are doing our level best to support Ukraine during this traumatic period for the country,” said James Watkins, secretariat of the British-Ukrainian Business Council, and head of policy at the London Chamber of Commerce and Industry.
Bank account closures are an “ongoing problem [for U.K. SMEs],” he added, “not just actually with Ukraine but a whole range of other markets.”
Discussions around rebuilding Ukraine’s shattered economy are a live issue in Whitehall, and in June the British government co-hosted a Ukraine Recovery Conference for world leaders and financiers in central London.
Opening the conference, Prime Minister Rishi Sunak called for governments to work in tandem with international financial institutions and business leaders to help “fast-track” Ukraine’s recovery. “The British government will continue to play its full part,” he pledged, announcing a “multiyear commitment to support Ukraine’s economy.”
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