MAS issues notices to FIs on financial measures in relation to Russia

THE Monetary Authority of Singapore (MAS) on Monday (Mar 14) issued 2 notices to all financial institutions (FIs), setting out financial measures in relation to Russia, and categories of payments and transactions that are excluded from the scope of financial measures.

Similar to an announcement by the Ministry of Foreign Affairs on Mar 5, MAS' first notice said that FIs are prohibited from dealing with designated banks and entities, and would need to freeze such assets or funds that may already be in their control in Singapore.

There were 4 designated banks named in the notice: VTB Bank Public Joint Stock Company; The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank; Promsvyazbank Public Joint Stock Company; and Bank Rossiya.

Designated entities refers to entities involved in delivery of military-related goods or certain electronics, computers or telecommunication goods to Russia. A list of such entities would subsequently be identified and added to the notice.

FIs are also prohibited from entering into financial transactions or providing financial assistance or services relating to the raising of new funds for the Russian government and the central bank of Russia, as well as any entity owned or controlled by them or acting on their behalf or direction.

Additionally, FIs are not allowed to enter into financial transactions or provide financial services to persons carrying out activities relating to certain sectors in the breakaway regions of Donetsk and Luhansk. The sectors are transport, telecommunications, energy, and prospecting, exploration and production of oil, gas and mineral resources.

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The use of digital payment token transactions are also not allowed in relation to the prohibited transactions and activities.

MAS' second notice - setting out non-prohibited payments and transactions - indicated that the prohibition against dealing with designated banks and entities would not apply to payments for basic expenses and "reasonable fees" for certain services.

This includes payment of basic expenses of any designated bank or entity, including insurance premiums, remuneration of employees, tax, mortgage payments, utility or telecommunication charges, and expenses that are necessary for compliance with regulatory requirements.

The restrictions also do not apply where the transfer is exclusively for the payment of fees charges imposed for the routine holding or maintenance of frozen funds or assets, or "reasonable" professional fees and associated expenses for provision of audit, tax, legal or payroll services.

Meanwhile, the prohibition would also not apply to "specified transactions".

This include transactions to facilitate a person's withdrawal of funds or other assets where the person is terminating an existing business relationship with the designated bank (and the person is not a designated bank).

Another specified transaction involves any transaction of funds, financial assets or economic resources which are necessary for the performance of the functions of the Russian embassy in Singapore.

FIs carrying out any of the non-prohibited transactions or payments would need to keep "accurate, complete and readable records, on paper or electronically" of the activities permitted.