The Russian Business Consulting (RBC) reported that China’s credit card processor, UnionPay, has refused to cooperate with Russian banks on Thursday, April 20.

Five unnamed banking sources confirmed the news with RBC. Three sources said threats of secondary sanctions were holding China back. Two others cannot say if the sanctions were the motive.

The two sources told RBC, “The project [to issue UnionPay cards] is temporarily on hold. They don’t officially confirm that it’s tied to sanctions, saying it’s on pause until further instructions.”

Major banks that UnionPay has halted services include Alfa Bank, Russia’s largest private lender, VTB, and Otkrytie.

RBC, however, said the Chinese payment system is still available to those not targeted by the Western penalties.

It is unclear UnionPay would suspend its services for how long.

In early March, Russia’s central bank referred to UnionPay as an alternative after the U.S.’s Visa and Mastercard suspended their services to Russian banks.

Over the month, U.S. officials have repeatedly warned that any governments or companies that try to undermine sanctions will face stiff consequences.

Sberbank, VTB, Alfa-Bank, Sovcombank, Promsvyazbank, and Otkritie are under the toughest sanctions from the U.S.; therefore, it would be risky if Union Pay continued cooperation with them.

Dmitry Gorbunov, a partner at Rustam Kurmaev and Partners law firm, said that the UnionPay payment system itself could determine which banks to work with and which not to.

Gorbunov said that, in theory, if UnionPay works with sanctioned Russian banks, the West can only pay close attention to its activities but cannot directly influence the Chinese payment system.

They would then use the most likely countermeasure to charge UnionPay for interacting with legal entities from the sanction list and impose secondary sanctions on it.

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