Money transfers between Russia, Türkiye close to standstill since start of year

Turkish exporters are facing a cross-border payments squeeze as banks refuse to process money transfers from Russia to pay for supplies of goods, the Ekonomim newspaper said, citing sources in the business community.

The problem has started becoming critical since December, when many exporters began complaining that they were unable to access payments originating from Russia whether denominated in Turkish lira or Russian rubles. Such transfers were either directly sent back by certain private banks or declined at the initial stage, as they were alleged to be payments for sanctioned products. According to the newspaper, such cross-border money transfers have come to a virtual standstill since January 1 and the situation is critically affecting exports, TASS reports.

The bilateral trade volume between Türkiye and Russia has been growing against the background of the Ukraine conflict and sanctions imposed by the EU and US, Ekonomim says. Turkish exports to Russia surged by 23.2 per cent year on year to $9.4 bln in 2023. Chemicals, machinery, automotive goods, fresh vegetables and fruits, and electronics have taken the lead in Türkiye’s exports to Russia. Some representatives of these sectors told the newspaper they had been challenged by the problem of the non-receipt or the complete absence of funds transferred in payment for export shipments. Problems are also being reported in the maritime shipping sector.

Ekonomim reported that problems with money transfers could be linked to the expansion of Western sanctions as well as risk mitigation concerns among Turkish banks and intermediaries that they not be hit by secondary sanctions. Financial institutions are often overcautious and refuse to process payments even for goods shipped by companies that are not under sanctions. The Turkish Ministry of Trade has begun untangling the problem and is gathering data on such money transfer refusals, the news outlet said. Furthermore, it has become more difficult for Russian nationals to register companies in Türkiye and open accounts with local banks.