Russia says JP Morgan 'illegally' blocked embassy money transfer

Tue Apr 1, 2014 2:38pm EDT
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By Thomas Grove and Megan Davies

MOSCOW (Reuters) - Russia accused U.S. bank JP Morgan (JPM.N: Quote) on Tuesday of "illegally" blocking a payment from one of its embassies to an insurance agency "under the pretext of anti-Russian sanctions".

In a statement on its website, the Russian Foreign Ministry suggested the action, which it called "unacceptable, illegal and absurd", would have consequences for the U.S. embassy and consulate in Russia.

One of the highest profile confrontations yet over U.S. sanctions, the move may increase tensions between Washington and Moscow and add to nervousness of U.S. companies over doing business in Russia.

JP Morgan gave no immediate comment.

"Washington should understand any hostile action against a Russian diplomatic mission not only constitutes a flagrant violation of international law but is rife with consequences that will inevitably effect the work of the embassy and general consulate of the United States in Russia," the statement said.

The payment came from Russia's embassy in Kazakhstan to Russian insurance agency Sogaz, which is partly owned by Abros, according to the Sogaz website. Abros is a subsidiary of Bank Rossiya, according to Russian media reports, which is facing U.S. sanctions.

Bank Rossiya was blacklisted by the White House last month as part of a widening effort to punish Russian President Vladimir Putin's inner circle over Moscow's role in the Ukraine crisis.

Financial advisers in Moscow have noted general confusion over interpretation of the sanctions, particularly when dealing with subsidiaries of companies which have either been sanctioned or which have shareholders that have been punished.   Continued...

The offices of JP Morgan in the Canary Wharf district of London, January 28, 2014. REUTERS/Simon Newman