Until three years ago, money transfer from Serbia to Russia was common in the business world. Traditionally, political and economic relations between Serbia and Russia have been at a high level. Natural and legal persons from Serbia and Russia had a privileged position in mutual business. The basis for economic cooperation between the two countries is two bilateral agreements: the Agreement on Visa-Free Travel between Serbia and Russia and the Agreement on Free Trade between Serbia and Russia.
Although the above agreements are still in force, money transfer from Serbia to Russia was hampered after the outbreak of the war in Ukraine. For this reason, numerous states and international organizations have imposed sanctions against Russia, against certain natural persons, companies and against numerous Russian banks. The introduction of sanctions made it difficult to do business with companies from the Russian Federation.
sanctions list that prevent money transfer from Serbia to Russia
The main bodies that have imposed sanctions on business with the Russian Federation are various states, financial institutions and international organizations.
You can check whether any of the natural or legal persons are on the list of companies affected by sanctions on the website of the US Department of the Treasury – Office of Foreign Assets Control (OFAC).
Regulation (EU) No. With Regulation No. 269/2014 of March 17, 2014 on restrictive measures in connection with actions that undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, the European Union adopted a list of sanctioned entities.
An important prerequisite for the enforcement of sanctions in business with companies from the Russian Federation, which made an impact on money transfer from Serbia to Russia are certainly the banks that in practice process payment transactions. The most effective way to monitor banks to see whether they are implementing the prescribed sanctions against companies from Russia is through correspondent banks. Even if the payment order is made through a domestic bank from Serbia, such money transfer from Serbia to Russia will be checked by the correspondent bank.
Entities, goods and services affected by sanctions
The sanctions affect the following legal entities and individuals from Russia:
- political parties
- armed forces and paramilitary groups, including the Wagner Group
- banks
- financial institutions
- listed media companies
- companies in the military and defense, energy, aviation, shipbuilding and mechanical engineering, IT, telecommunications and insurance sectors
- “All-Russian Popular Front” movement.
The following products are subject to sanctions on trade with Russia:
crude oil and refined petroleum products, LPG, coal and other fuels, steel, iron, cement, bitumen, asphalt, copper and aluminum wires, pipes, wood, paper, synthetic rubber, plastics, helium, spirits, cigarettes, cosmetics, diamonds, gold, jewelry.
Services covered by sanctions in trade with Russia, on the basis of which the transfer of money from Serbia to Russia will be prevented, include:
Crypto wallets, accounting, auditing, bookkeeping, tax consulting, architectural and engineering services, IT consulting, legal advice, advertising, market research, opinion polls, technical assistance, brokerage and financial assistance related to the sea transportation of Russian oil, intellectual property rights and trade secrets related to goods and technologies covered by other sanctions.
Exclusion of Russian banks from the SWIFT system
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is an international banking network and messaging software used today by more than 10,500 financial institutions from 215 countries.
The following Russian banks have been removed from the SWIFT system: VTB Bank, Vnesheconombank (VEB), Rossiya Bank, Sovcombank, Bank Otkritie, Novikombank and Promsvyazbank.
Trade with these banks is possible exclusively through the Russian SPFS system.
SPFT is a system for interbank money transfer and is a kind of alternative to the SWIFT system. Currently, around 600 banks from 20 countries participate in the SPFT system.
EU companies operating outside Russia are prohibited from connecting to SPFS, while financial institutions are prohibited from conducting transactions with companies using SPFS outside Russia. Serbia is not a part of SPFT and the money transfer from Serbia to Russia i.e. to these sanctioned Russian banks is not possible.
money transfer from Serbia to Russia
Money transfer from Serbia to Russia is limited. Although Serbia is not a member of the European Union, Serbia is a candidate for membership in the Union and therefore is obliged to follow the foreign policy of the European Union.
In Serbia, it is possible to open an account in three banks that conduct business with companies from the Russian Federation. Payments are made through the SWIFT system and transactions are converted into rubles or dinars.
However, payment transactions face the following problems:
- Settlement of payment transactions through correspondent banks
- Limited available resources of domestic, Serbian banks
- Fear of political pressure.
Execution of payment transactions through correspondent banks represents the completion of the transaction in doing business with companies from Russia. If the domestic bank does not create a problem in a particular transaction, the problem may arise in activities of correspondent banks.
Another reason for the difficulty for the money transfer from Serbia to Russia is the limited resources of Serbian banks. Due to the high demand for bank transfer services to and from Russia, banks are increasingly refusing to open accounts for small clients because they do not have enough staff to handle such transactions. It should be noted that transactions with Russia are specially monitored and processed, subject to special control and the use of automation in such money transfers has been reduced.
The last reason why money transfer from Serbia to Russia is difficult is the fear that, due to the large turnover in interbank transactions, political pressure will be exerted on Serbia to support Russia in the war.
However, it should be noted that payment transactions with Russia are in principle possible, but not easy to carry out.
In addition to the mentioned possibility of conducting transactions between Serbia and Russia through commercial bank accounts, there is also the possibility of making payments through fast money transfer services. The mentioned method is a method of sending or receiving money between natural persons.
Finally, we would like to mention that the possibility for the money transfer from Serbia to Russia and vice versa is changing rapidly in practice, so we will continue to monitor how business with Russian companies and individuals will develop in the coming period.