Chinese Heihe Bank Halts Russian Payments After EU Sanctions

China's Heihe Rural Commercial Bank, one of the last Chinese banks willing to handle payments for Russian banks not under sanctions, has stopped accepting payments from Russia following European Union sanctions imposed for providing crypto-asset services that undermined anti-Russian restrictions. Although payments continued for about a month after the sanctions took effect in early August, the bank ceased accepting funds recently, citing internal infrastructure adjustments and coordination with the People's Bank of China. This halt has disrupted cross-border transactions and fragmented Russia's payment system with China, with payment agents now handling much of the activity. Other Chinese banks have also refused to process transfers originating from Heihe due to its inclusion on the EU sanctions list. The EU sanctions prohibit all EU entities from conducting transactions with Heihe, reflecting broader Western efforts to tighten financial pressures on Russia amid its ongoing war in Ukraine. The development coincides with heightened China-Russia cooperation, including a recent summit between Presidents Vladimir Putin and Xi Jinping, underscoring Moscow's reliance on Beijing despite international sanctions.