Dos and Don'ts: MAS unveils details of financial measures vs Russia

The measure covers digital token payments.

The Monetary Authority of Singapore (MAS) has laid out the details of its financial measures against Russia, prohibiting all financial institutions of five types of financial transactions.

Under MAS’ Notice SNR-N01, financial institutions include “any person licensed, approved, authorised, designated, recognised, registered or otherwise regulated under any Act administered by the Authority, including any person who is exempted under any Act administered by the Authority from being licensed, approved, authorised, designated, recognised, registered, or regulated.”

From 14 March, all financial institutions will be prohibited from doing the following:

1. Deal with and freeze assets of designated banks and designated entities.

This means that financial institutions must not, directly or indirectly, including through any provider of any brokering or other intermediary services, do the following to any designated bank or designated entity:

• Establish business relations with or undertake any financial transaction for;
• Enter into any financial transaction with;
• Provide, or facilitate or procure the provision of, any financial assistance or service (including but not limited to the granting of export credits, guarantees, insurance or re-insurance) to; or
• Transfer any financial assets or resources, or other assets or resources.

A financial institution that has in its possession, custody or control in Singapore, any funds, financial assets or economic resources owned or controlled, directly or indirectly, by a designated bank or a designated entity must also do the following:

• Immediately freeze all such funds, financial assets or economic resources, as the case may be; and
• Ensure that such funds, financial assets or economic resources are not made available, whether directly or indirectly

Designated banks include VTB Bank Public Joint Stock Company, The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank, Promsvyazbank Public Joint Stock Company, Bank Rossiya, and all entities owned or controlled by, directly or indirectly, or acting on behalf of or under the direction of, the aforementioned entities.

Meanwhile, MAS identifies designated entities as those involved in activities related to any item specified in Category Code in the List of Military Goods set out in Division 2 of Part 1 of the Schedule to the Strategic Goods (Control) Order 2021 or in  Category Code under Category 3 (Electronics), Category 4 (Computers) or Category 5 (Telecommunications and “Information Security”) in the List of Dual-Use Goods in Division 2 of Part 2 of the Schedule to the Strategic Goods (Control) Order 2021.

It also includes entities “owned or controlled by, directly or indirectly, or acting on behalf of or under the direction of, such identified entities.”

2.  Enter into financial transactions or provide financial assistance or services, etc., in relation to the delivery of certain items.

Under this prohibition, financial institutions cannot provide, facilitate or procure the provision of, any financial assistance or service –- including but not limited to the granting of export credits, guarantees, insurance or re-insurance –- to any person involved in the export from, transhipment in or transit through, Singapore or any other jurisdiction to Russia of certain items (mentioned under the “designated entities” definition of this article).

3.  Enter into financial transactions or provide financial assistance or services, etc., in relation to the raising of new funds for the Russian government and the Central Bank of the Russia Federation.

This includes the purchase, sale, provision of financial services for, or assist in the issuance of, or otherwise deal with, securities or certificates of deposit issued by any person on or after 14 March.

Financial institutions cannot likewise make or be part of  “any arrangement to make any new loans or credit” to the Russian government, the Central Bank of the Russian Federation, or a legal person or legal arrangement that is owned or controlled by, directly or indirectly, or acts on behalf of or under the direction of the two aforementioned, on or after 14 March.

An exception to this rule is loans or credit that have a specific and documented objective of making funds available for trade which does not involve the export from, transhipment in or transit through, Singapore or any other jurisdiction to Russia of certain items (mentioned under the “designated entities” definition of this article).

4.  Enter into financial transactions or provide financial assistance or services, etc., in relation to the breakaway regions of Donetsk and Luhansk.

Financial transactions with any person involved in any activity in the following sectors Donetsk or Luhansk will not be allowed: transport; telecommunications; energy; prospecting, exploration and production of oil, gas and mineral resources sectors of Donetsk or Luhansk.

5. Digital payment token transactions

This includes, but is not limited to:

(a) offering the purchase, sale or exchange of digital payment tokens;

(b) brokering transactions between counterparties on digital payment tokens;

(c) offering or arranging financing for digital payment token transactions;

(d) offering the borrowing or lending of digital payment tokens; and

(e) making or arranging any primary and secondary market offerings of digital payment tokens that make available the services referred to in (a), (b), (c) or (d) to other persons.

The abovementioned measures will not be applied to any transaction or business relations in respect of which the MAS issues a direction to exclude from the scope of the financial measures; and any transaction or business relations in respect of which the MAS, upon application by a financial institution, grants an exemption pursuant to section 178(2) of the MAS Act.

Meanwhile, financial intuitions were also ordered to immediately inform the MAS if they have information relating to funds, financial assets, economic resources, any transaction or proposed transaction, act or thing, of designated banks or entities.