(NewsGlobal.com)- Government sanctions on Russia are starting to be implemented by private financial institutions.
This week, payment card companies in the U.S. such as Mastercard and Visa have officially blocked various financial institutions based in Russia from access their networks. This ensures that the two card payment systems comply with the U.S. government’s sanctions that were placed on Russia following its violent invasion of neighboring Ukraine.
On Monday, Visa said they were taking very prompt action to ensure that they would be compliant with every sanction that applied to them. In addition, both Visa and Mastercard said they would be contributing $2 million to aid various humanitarian efforts in the region.
In a statement released on Monday, Mastercard said:
“We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve.”
These moves shouldn’t result in a huge hit to the bottom lines of either card payment company, but they could have significant impacts on firms in Russia.
Last year, only roughly 4% of the net revenues for Mastercard derived from business that was conducted out of, into or within Russia. According to filings the company made on Tuesday, 2% of its net revenues from 2021 came from all transactions in Ukraine.
Citing sources familiar to the situation, Reuters reported that Visa was required under government sanctions to suspend any person listed as a Specially Designated National from accessing their network. The federal government added many financial firms based in Russia to that particular list. That includes VTB, the country’s second-largest lender, as well as its central bank.
Other countries stood up to the plate to enact serious similar financial restrictions on Russian life and business. In conjunction with Canada, Britain and many other European countries, the U.S. announced Saturday that certain lenders would be blocked from accessing the SWIFT international payment system.
That was expected to be a significant blow to the Russian economy, as it’s the secure network that most financial institutions use to communicate with other financial institutions around the world. Without access to SWIFT, it may be hard for Russian companies to conduct normal everyday business.
As a result of that sanction, and the other financial sanctions put on the country, Russian residents were forced to wait in huge lines at ATMs. They were trying to take out as much money as they could from their accounts, anticipating that they would either not be able to access their funds or that their banks would begin to limit how much they were able to withdrawal from their accounts.
To this point, Russia is still calling their military action in Ukraine as a “special operation.” Most of the rest of the world, though, is considering it a full-fledged invasion and war as Russia looks to expand its influence.
Outside countries haven’t sent troops to help Ukraine yet, opting instead for heavy sanctions that are designed to convince Russia and its president, Vladimir Putin, from continuing on the war path.