UAE Central Bank revokes license of Russia's MTS Bank as sanctions tighten

DUBAI — The Central Bank of the United Arab Emirates (UAE) canceled Russia's MTS Bank Abu Dhabi license citing “sanctions risk”, as the West tightens its noose on Moscow following its invasion of Ukraine. 

The UAE bank plans to close the Russian bank’s operations within six months from the date of the decision, according to a Friday press release. The MTS branch will not be allowed to open new accounts and conduct transactions, except to clear prior obligations during that time.  

“This decision comes after considering the available options regarding the new status of the MTS Bank and taking into account the sanctions risks associated with the bank after the designation,” stated the press release. 

This development comes after increased pressure from the United States to put a halt to Russia trade ties. 

The United States and the United Kingdom extended Western-imposed sanctions to the Russian MTS in February, which left the UAE Central Bank considering its options with the bank it licensed to 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 their deepening financial ties with Moscow were blocking its efforts to isolate Russia, according to Bloomberg sources. 

Gulf Cooperation Council (GCC) countries, including the UAE, took a neutral stance amid Western sanctions placed on Russia for its war on Ukraine that started more than one year ago.

The region’s mostly impartial position gave it economic and also political opportunities and welcomed Russian wealth. 

It allowed the UAE and Saudi Arabia to take on the role of negotiator between the United States and Russia for the exchange of two prisoners in December, according to state news agency WAM. 

The UAE has also had an ongoing reciprocal visa-free travel agreement with Russia since Feb. 17, 2019, which allows valid passport holders who have no intention to work or study in the UAE or Russia the right to stay in each country for a period of 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 the UAE’s policies have helped strengthen the country’s real estate market and other industries with foreign direct investment.

“The Ukraine and Russia war was very beneficial to the real estate market here. People have pointed to the UAE as a safe haven, a place where they can be welcomed,” he said at the time.