UAE revokes Russian lender’s licence

The Central Bank of the UAE has revoked the licence of MTS Bank, a Russian lender, citing “sanctions risks”. The bank has been given six months to wind down its Abu Dhabi operations and close its branch. During the six-month period, the bank will be barred from opening new accounts and carrying out any transactions apart from clearing prior obligations.

MTS Bank, which has branches in Moscow and Abu Dhabi, was included in a list of sanctions rolled out by the US Treasury in February. The UAE initially defended its decision to grant MTS a licence after the US designation, saying the bank “contributed to supporting legitimate trade between the two countries and servicing the Russian community in the UAE”.

However, the US has expressed concerns that Russia has been able to sidestep sanctions and export controls due to its economic ties to the UAE. Non-oil trade between the UAE and Russia has expanded by 57% in the first nine months of 2022. US officials have labelled the UAE a “country of focus” for the US, as it seeks to choke Russia’s ties to the global economy. Emirati companies have been sanctioned by Washington for helping Iran evade sanctions.

This latest move by the UAE marks a step back from its previous stance of defending its decision to grant MTS a licence. It comes amid concerns over financial regulations, with the UAE having been placed on a money laundering “grey list” by the Paris-based Financial Action Task Force.

The UAE has sought to defend its position as the region’s premier business and trade hub, but has moved closer to Russia and China in recent years as part of a more independent foreign policy streak. However, its talks with Washington to acquire the F-35 fighter jet broke down out of concerns Beijing would gain access to sensitive US technologies.