Financial institutions

Visa and Mastercard block Russian financial institutions after sanctions

This image shows a person’s hands holding cash and Visa and Mastercard. On February 24, the United States announced that it was imposing sanctions on major Russian banks, including Sberbank and VTB, in response to the special military operation in Ukraine. Sanctioned banks will not be able to reissue Visa and Mastercard cards after the expiration dates.

Elena Afonina | CASS | Getty Images

Payment and credit card giants Visa and Mastercard have blocked financial institutions from their networks in response to sanctions targeting Russia after its invasion of Ukraine.

Last week, Russia launched an unprecedented invasion of Ukraine, forcing the United States and governments around the world to impose a series of sanctions aimed at cutting Moscow off from the global financial system.

Last week, the United States placed a number of Russian individuals and financial institutions on a sanctions list called the Specially Designated Nationals List. This effectively prevents US companies and individuals from doing business with any person or entity on this list. Washington also sanctioned the Russian central bank on Monday.

On Monday, Mastercard said it had “blocked several financial institutions” from its payment network, without naming companies or individuals. “We will continue to work with regulators in the coming days to fully meet our compliance obligations as they evolve,” the company added.

Rival Visa has also blocked people on the sanctions list, saying Tuesday it was “taking prompt action to ensure compliance with applicable sanctions and is prepared to comply with any additional sanctions that may be applied.”

Visa and Mastercard have also pledged $2 million for humanitarian aid funds for Ukraine.

It comes after the United States, Canada and their European allies agreed on Saturday to remove major Russian banks from the SWIFT interbank messaging system. This means that Russian banks will not be able to communicate securely with banks beyond its borders.

The far-reaching sanctions caused the value of the Russian ruble to fall. Russian citizens also line up to withdraw money from ATMs.

Meanwhile, Ukrainian Deputy Prime Minister Mykhailo Fedorov called on major cryptocurrency exchanges to block Russian user addresses.

Bitcoin and other digital currencies could become a way for Russians to circumvent sanctions and get their money out of the country, as cryptocurrencies are not owned or controlled by a single entity like a central bank.

Binance, the world’s largest exchange, said it would block the accounts of sanctioned Russians, but stressed it would not “unilaterally” freeze the accounts of all Russian users.

CNBC Amanda Macias contributed to this report.