DUBAI – The Central Bank of the United Arab Emirates (UAE) has canceled the license of Russia’s MTS Bank Abu Dhabi citing the “risk of sanctions”, as the West lashes out at Moscow after it invaded Ukraine.
The UAE bank plans to close the Russian bank’s operations within six months from the date of the decision, according to a press release on Friday. MTS branch will not be allowed to open new accounts and make transactions, except to clear prior obligations during that time.
“This decision comes after consideration of the options available regarding the new status of MTS Bank and taking into account the sanctions risks associated with the bank after the designation,” the press release said.
This development comes after increased pressure from the United States to stop Russian trade ties.
The United States and the United Kingdom extended Western-imposed sanctions on Russia’s MTS in February, leaving the UAE Central Bank considering its options with the bank it sanctioned last year.
Earlier that month, the United States made its position clear during a regional tour. On a trip to the UAE, Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the US Treasury, told UAE officials that its deepening financial ties to Moscow were hampering its efforts to isolate Russia, according to Bloomberg sources.
Gulf Cooperation Council (GCC) countries, including the UAE, have taken a neutral stance amid Western sanctions imposed on Russia for its war on Ukraine that began more than a year ago.
The region’s largely neutral position gave it economic and political opportunities and welcomed Russia’s wealth.
It allowed the UAE and Saudi Arabia to take on a negotiating role between the United States and Russia regarding the exchange of two prisoners in December, according to state news agency WAM.
The UAE has an ongoing reciprocal visa-free travel agreement with Russia since February 17, 2019, which gives valid passport holders who have no intention of working or studying in the UAE or Russia the right to stay in each country for a period. 90 days visa free.
Izzat Dajani, CEO of IMCapital Partners, a MENA-T investment management and corporate advisory company based in Dubai, told Al-Monitor in December that UAE policies have helped strengthen the country’s real estate market and other industries with foreign direct investment.
“The war between Ukraine and Russia was very beneficial to the real estate market here. People have come to regard the UAE as a safe haven, where they can be welcomed,” he said at the time.