Chinese banks increasingly rejecting payments from Russian banks amid fears of secondary sanctions

Chinese banks have begun to return payments made by Russian companies for Chinese goods that have already been delivered, Russian state-affiliated news outlet Vedomosti reported on Monday.

Four affected Russian businesspeople confirmed to Vedomosti that their yuan payments had been returned to them months after goods exported from China had cleared Russian customs and been received.

One Vedomosti source reported getting a refund three months after receiving goods ordered from China, while a Chinese supplier told another source that their payment could not be received in China and returned the payment in full without further explanation.

Yevgeny Ferenets, the commercial director of Russian freight forwarder RM Logistic, told Vedomosti that the phenomenon was becoming widespread. In July, Russian state-affiliated news outlet Kommersant reported that 80% of yuan payments issued from Russia had bounced back following rising fears of a crackdown on secondary sanctions and an ever-increasing demand for additional documentation.

Andrey Gusev of leading Russian legal services provider Nordic Star told Vedomosti that data discrepancies, minor errors, Chinese currency control violations, or fear of secondary sanctions were behind the increasing number of Russian bank transfers being returned, and noted that many Chinese companies now prefer prepayment from Russian clientele.

Head of foreign economic activity at Blanc Bank, Anastasia Sorokina, told Vedomosti that the issue was due to the strict regulations imposed on currency transfers by Chinese banks, which she said were wary of being targeted by secondary Western sanctions.

Russian yuan transfers can be held up for several weeks while a decision over whether to accept the payment is made, and can be cancelled without reason. Chinese banks have reportedly started to label Russian money either “dirty” or “clean”, and there have even been cases in which Chinese banks refuse to accept any money that can be traced back to Russia at all.