Freedom Bank in Kazakhstan has instituted a prohibition on transactions involving the Russian payment system Mir, Forbes.kz reports. The measure, outlined in a notification within the financial organization's application on February 27, restricts the sending of money transfers between users in both directions—from Mir cards and to these cards.
Alternative Payment Options Recommended
To navigate the restriction, customers are encouraged to utilize cards issued outside the Russian Federation or opt for transactions through the SWIFT system. Additionally, transfers can be facilitated via Tsifra Bank, formerly under the Freedom Holding group until 2022.
Context of Sanctions and Regulatory Measures
The decision to block transactions with Mir follows the inclusion of the national payment card system, which operates Mir, in the SDN (Specially Designated Nationals) list of the U.S. Treasury on February 23. Similar restrictions have been imposed against several Russian banks, as well as entities like the developer PIK and the luxury car manufacturer Aurus.
NSPK (National Payment Card System) General Director Vladimir Komlev faced American sanctions in September 2022. The United States cautioned foreign banks about the potential exploitation of Mir to evade restrictions, highlighting the associated risks of secondary sanctions.
Precedent and Regulatory Response
In response to escalating tensions, numerous foreign banks ceased operations with Mir cards. Uzcard, the national payment system of Uzbekistan, temporarily suspended Mir card services, citing technical reasons, but maintained exceptions for co-branded cards.
In December 2022, the Agency for Regulation and Development of the Financial Market of Kazakhstan announced that banks in the republic had received authorization to service Mir cards issued to individuals. However, the decision to engage with Mir cards remains at the discretion of individual financial institutions.
Earlier, it was reported that the license of “Qiwi Bank”, a key player in the international money transfer system, was on the brink of revocation in Kyrgyzstan. This development, currently under review by the National Bank of Kyrgyz Republic (NBKR), comes in line with banking legislation.
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