Dubai: The UAE Central Bank is cancelling the license to operate for Russia's MTS Bank, which will now have to wind down operations within six months from the date of the decision. MTS operates one branch in Abu Dhabi.
"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," the UAE Central Bank said in a statement.
In the winding down process, the MTS Bank branch will be prohibited from opening new accounts and conducting transactions, 'except for clearing prior obligations and the bank’s use of Central Bank’s payment systems will be restricted to this purpose only'.
MTS Bank had come under the wide-ranging sanctions on Russia imposed by the US and allies after the breakout of the conflict with Ukraine.
Coming under review
It was last month that the UAE regulator said it is studying 'available options regarding the new status of the bank' and that an 'appropriate decision will be taken in due course considering the obligations incurred by the branch during the previous period'. The decision to cancel the license now stems from this.
In its review statement last month, the UAE regulator said that MTS had 'contributed to supporting legitimate trade between the two countries and servicing the Russian community in the UAE, under the supervision of the Central Bank'.
Extensive pre-licensing scrutiny
Ahead of the granting of the license to operate in UAE, the Central Bank 'reviewed the branch’s AML/CFT policies and tested their related electronic systems'. This was in 'accordance with the requirements of licensing banks to operate in the UAE'.
"In view of the circumstances that the country of the bank's headquarters is going through, the Central Bank supervised the trade finance related transactions that exceed certain threshold," the regulator had said last month.
