Turkish private lender Işbank on Monday said it had suspended the use of the Russian payment system Mir after the United States warned it would target people and entities if they are found helping Moscow skirt financial sanctions.
Last week, the U.S. sanctioned the chief executive of the Bank of Russia’s National Card Payment System (NSPK), which runs Mir, saying it was seeking to hold the Russian government accountable for its Feb. 24 invasion and continuing war against Ukraine.
The importance of Mir cards for Russians rose substantially this year after U.S. payments firms Visa and Mastercard suspended operations in Russia and their cards issued in Russia stopped working abroad.
In addition to Türkiye, Cuba, South Korea, Vietnam and a handful of former Soviet republics accept Mir, which means both “peace” and “world” in Russian, with others such as Iran intending to follow suit soon.
The shares of Işbank traded down around 10% while the banking index of the Borsa Istanbul Stock Exchange (BIST) was down more than 9% on Monday session triggering indexwide circuit breakers which temporarily halt trading.
In a statement, Işbank said it was keen to carry out its business in compliance with the national and international laws, regulations and commercial business principles.
A letter from U.S. Treasury Deputy Secretary Wally Adeyemo to Turkish businesses last month cautioned that companies risked consequences if they did business with Russians or Russian institutions that are under U.S. sanctions.
Officials have reiterated that Türkiye would not allow international sanctions to be breached.
Turkish Finance Minister Nureddin Nebati has said there is no reason to be concerned by the U.S.’ warning and that it is “meaningless” for Turkish businesses to worry about the letter from Washington.
Russians who have arrived in Türkiye since Moscow invaded Ukraine have had difficulties in making banking transactions as local lenders followed the implications of sanctions imposed by Western countries on Russia.
Türkiye has criticized Moscow’s invasion and provided Ukraine with arms, including drones, which played a significant role in deterring a Russian advance early in the conflict, while refusing to join the West in imposing sanctions on Russia – a stance that it says has helped its mediation efforts reap results.
Türkiye has said sanctioning Russia would have hurt its economy and President Recep Tayyip Erdoğan has said his country must remain “neutral” in the conflict because its industries rely heavily on Russian energy imports.
The U.S. and European Union are said to have stepped up pressure on Türkiye to enforce Russian sanctions, the Financial Times reported last Thursday. The U.S. is said to be focusing on Turkish banks that have integrated into the Mir payments system, as Brussels prepares a delegation to express its concerns to Turkish officials directly.
Işbank was the first bank in Türkiye to accept Mir back in April 2019, with at least five Turkish banks now using the payment system allowing Russian tourists to pay for their purchases in Türkiye.