Russia Says JPMorgan 'illegally' Blocked Embassy Money Transfer
April 2, 2014 3:09 PM EST
A flag hangs on the wall of the JP Morgan company stall on the floor of the New York Stock Exchange in New York July 15, 2010.
In a statement on its website, the Russian Foreign Ministry suggested the action, which it called "unacceptable, illegal and absurd," would have consequences for the U.S. embassy and consulate in Russia.
One of the highest profile confrontations yet over U.S. sanctions, the move may increase tensions between Washington and Moscow and add to U.S. companies' nervousness over doing business in Russia.
"Washington should understand any hostile action against a Russian diplomatic mission not only constitutes a flagrant violation of international law but is rife with consequences that will inevitably effect the work of the embassy and general consulate of the United States in Russia," Russia's statement said.
The bank said later in its own statement that it is subject to government regulations and that it "will continue to seek guidance from the U.S. government on implementing their recent sanctions."
The payment came from Russia's embassy in Kazakhstan to Russian insurance agency Sogaz, which is partly owned by Abros, according to the Sogaz website. Abros is a subsidiary of Bank Rossiya, according to Russian media reports, which is facing U.S. sanctions.
Industry consultants in Moscow have said financial institutions are unclear about how to apply the new rules in some situations, such as when dealing with subsidiaries of companies which have either been sanctioned or which have shareholders that have been punished.
"There is a lot of confusion ... as to what might be the full scope of the sanctions and what we are hearing is while the sanctions are specific, a lot of U.S. companies are adopting a much more risk-averse or cautious approach," said Chris Weafer, partner at Macro Advisory.
"There is almost self-sanctioning going on."
"The general rule is that if a company is controlled ... by an individual on the list, they can't do business with that company," one financial consultant said last week, speaking on condition of anonymity.
"But it's quite a slippery slope regarding the whole holding structure," the source said.
Russia's accusation could damage relations the bank has with the country. JPMorgan generated $55.6 million in investment banking fees in Russia last year, with a 7 percent market share. Worldwide, JPMorgan recorded $6.4 billion in investment banking fees last year, according to the company's annual report.
JPMorgan is the biggest U.S. bank by assets and for its size it does relatively little lending in Russia. At year-end, its loans and trading positions at risk to Russia totalled $5.4 billion compared with the company's total assets of $2.4 trillion.
Most Popular Slideshows
- Kate Middleton’s Mom Accused Of Being A Social Climber, Prince George Not Seen By Relatives
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- Angelina Jolie & Brad Pitt Heads to Malta For New Movie After A Whirlwind French Wedding [PHOTOS]
- Top 5 Richest Tennis Athletes
Join the Conversation
- ISIS Video of Slain Syrian Soldiers Raises Doubts; Syrian Gov't Demands Release of Captured Troops
- Family of Accidentally Killed Arizona Shooting Range Instructor Charles Vacca Feels Sorry For 9-Year-Old Uzi Girl
- Viral Video Kevin Droniak Grandma: Teenager Shows Grandma Their Videos Together, Grandma Gives Priceless Reaction
- Major Highlights On 1400 Minor’s Sex Assault
- 7-Year Old Buried Alive By 'Family' Crawls Out From Under The Ground
- Sept 19 iPhone 6 Release Date Firms Up as iWatch Rollout Delayed to Jan 2015 – Reports
- Apple iWatch is iPhone 6 Accessory on Sept 19 Release Date: 6 Confirmed Specs & Features
- Canada Vs Russia War Erupts Via Twitter on Russia-Not Russia Maps
- James Foley Torture Involves CIA Waterboarding Technique
- Malaysia Airlines to Axe 4,000 Employees, Including CEO; Suspends Trading of Shares
- West Looks Divided in Tackling Russian Invasion In Ukraine
- North Korea Banker Who Manages Money of Kim Jong-un Defects to Russia With $5 Million