Russia says JPMorgan 'illegally' blocked embassy money transfer

Tue Apr 1, 2014 5:21pm EDT
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By Thomas Grove and Megan Davies

MOSCOW (Reuters) - Russia accused U.S. bank JPMorgan (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 U.S. companies' nervousness over doing business in Russia.

"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," Russia's statement said.

The bank said later in its own statement that it is subject to government regulations and that it "will continue to seek guidance from the U.S. government on implementing their recent sanctions."

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.

Industry consultants in Moscow have said financial institutions are unclear about how to apply the new rules in some situations, such as 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