Visa Inc (V.N.) and Mastercard Inc, both based in the United States, have barred various Russian financial institutions from their networks to comply with federal sanctions implemented in response to Moscow’s invasion of Ukraine.
Visa announced on Monday that it would take immediate measures to guarantee compliance with appropriate penalties, as well as a $2 million donation to humanitarian relief. Mastercard has also pledged a $2 million donation.
In a subsequent statement issued late Monday, Mastercard stated, “We will continue to engage with regulators in the days ahead to comply with our compliance requirements as they evolve properly.”
In 2021, commerce performed inside, into, and out of Russia accounted for around 4% of Mastercard’s net sales. Meanwhile, according to a disclosure on Tuesday, commerce performed inside, into, and out of Ukraine amounted to 2% of its net sales.
The government penalties compel Visa to suspend access to its network for businesses identified as Specially Designated Nationals. The U.S. has added several Russian financial institutions to the list, including the country’s central bank and the country’s second-largest lender, VTB (VTBR.MM).
Russians deeply affected by Putin’s decision
The United States, the United Kingdom, Europe, and Canada imposed further sanctions against Russia on Saturday, including denying some lenders access to the SWIFT international payment system.
On Sunday and Monday, people of Russia hurried to ATMs and queued for hours, fearful that their bank cards might stop working or that banks would limit cash withdrawals.
Many Western banks, airlines, and other businesses have severed connections with Russia, citing the country’s irresponsible acts. Russian planes have been barred from entering European and Canadian airspace.
Russian ruble plummets
The ruble’s value has plummeted as a result of the broad sanctions. In Russia, citizens have also had to wait in enormous queues to withdraw money from ATMs.
In the meantime, Ukraine’s Vice Prime Minister, Mykhailo Fedorov, has asked major cryptocurrency exchanges to restrict Russian customers’ addresses.
Because cryptocurrencies are not owned or managed by a single organization like a central bank, they might provide a vehicle for Russians to potentially avoid sanctions and move their money out of the country.
Binance, the world’s largest exchange, has said that it will ban the accounts of sanctioned Russians but that it will not “unilaterally” freeze the accounts of all Russian users.