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September 29, 2022

Turkey’s state-backed banks to halt use of Russia’s Mir payment system

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Turkey’s state-backed banks are planning to ditch the Russian payment system, Mir, as the US pressure mounts, Bloomberg reported, citing a senior Turkish official. 

Halkbank, VakıfBank and Ziraat Bank are the latest to join their private sector peers in withdrawing support for Mir, the publication said. 

Last week, Isbank and Denizbank decided to abandon the Russian payment system.

The development comes amid concerns that the Turkish banking systems could become a gateway to circumvent the sanction imposed on Russia following its invasion of Ukraine. 

In mid-September, the US Treasury department issued a statement that said non-US financial institutions that enter new or expanded agreements with Russia’s National Card Payment System (NSPK) stand at risk of supporting Russia’s efforts to evade sanctions. 

The US Treasury also said it is prepared to impose blocking sanction on entities supporting Moscow bypass sanctions. 

Recently, the US also expanded the scope of its sanctions to target Vladimir Valerievich Komlev (Komlev), CEO of Bank of Russia ’s NSPK. 

NSPK runs the Mir system, which is the Russian equivalent of Visa and Mastercard and is popular among Russian tourists and brings foreign revenue to Turkey. 

According to the Financial Times’ report, Turkey had always stressed that its banks would continue transacting with individuals or companies that are subject to sanction. 

Turkey is the only NATO member that has not signed up to western sanctions on Russia but rising pressure from the US and the risks to Turkish Bank from their ties to the western financial system seems to have prompted the action. 

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