Sanctions block bank transfers to Russia, but the mortgage is still due
Intermediaries do not usually take a percentage from the transfer. PHOTO: ADOBE STOCK.
Aleksandr Trifonov
Published 09.04.2025 2:03
Updated 09.04.2025 2:10
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Once a month, Pyotr needs to pay the mortgage for his apartment in St. Petersburg. But since he lives in Finland, it’s not a simple endeavour.
Due to the sanctions imposed by the Western states, Russia has been pretty much excluded from the international finance system. Russian banks are disconnected from the SWIFT system, major credit cards don’t work in the country, and European banks are not cooperating with the Russian ones.
For private individuals, this means that direct bank transfers, card payments, and transfers via fintech apps from EU countries to Russia are currently impossible.
Pyotr, however, has figured out a workaround. He does not appear in this article with his own name, because of the sensitivity of the issue.
When Pyotr’s mortgage is due, he visits a friend, who also lives in Finland. He hands over about 250 euros in cash – the equivalent of his monthly mortgage payment in roubles.
Pyotr’s acquaintance then informs his contact in Russia, who transfers the same amount in roubles to Pyotr’s relatives, who take care of the mortgage. In due course, the contact person will get their money back from the income that Pyotr’s acquaintance in Finland has in Russia.
Physically, no money has crossed the Finnish-Russian border, but Pyotr’s mortgage payment has still been paid.
The need to develop workarounds
This kind of arrangements is typical for the Russian diaspora in Finland. Many people still maintain bank accounts and need to make regular payments in Russia.
Since the money is not transferred through regulated services, such as PayPal, there is no regulatory oversight by the banks or the financial authorities. This means that transfers rely on mutual trust. If someone just decide to run away with the money, there would be no one to complain to.
That’s why the arrangements often rely on personal relationships. Information about them usually stays within the diaspora.
Apart from making payments, also accessing one’s own account on a Russian bank has become difficult. Some banks can still be accessed over the internet from Finland, but many have been blocked because of the sanctions.
Also here, people have figured out workarounds. Sometimes, a simple VPN is enough. VPN is a system that hides an internet user’s real location and makes it look like that the traffic is coming from another country.
Other options include special browsers that can be installed on mobile devices. For example, a browser called Luna enables access to Russian banks from EU countries. Roman Korobov, head of the Finnish IT company Kuore Lab, confirms that these workarounds are not technically difficult for the average user.
Perhaps legal, perhaps not
The legality of these workarounds is not clear. Sanctions do not explicitly prohibit such P2P settlements. They are not prohibited under EU law either, according to Russian economist and exiled politician, former Deputy Finance Minister and Deputy Chairman of the Central Bank Sergey Aleksashenko.
However, as Chief Specialist in Anti-Money Laundering at the Financial Supervisory Authority of Finland Anssi Leisio points out in an email to Satakieli:
When dealing with sanctions, it’s important to consider the specific circumstances of each case. Sanctions are complex and often require a detailed assessment to determine if an activity is prohibited. One should, for example, consider, whether there are sanctioned individuals or entities (such as banks) involved, even indirectly, or for which purposes are the funds intended.
In other words, the transactions must not involve sanctioned individuals or banks, even indirectly, nor be used for sanctioned purposes. For example, if the transferred money ends up in an account at a bank that is sanctioned, that could be seen as a sanction violation.
Under Finnish law, breaching EU sanctions may constitute a criminal offense. The maximum penalty for a regulation offense (säännöstelyrikos) is 2 years of imprisonment, and for aggravated cases, up to 4 years, Leisio reminds.
Each case is unique, so it’s crucial to assess all relevant factors to ensure compliance with sanctions. If there’s any uncertainty about whether an activity is prohibited, the Ministry for Foreign Affairs in Finland, as the competent authority, can provide assistance, Leisio writes.