US banks block accounts of customers with Russian IP addresses

As lawyers told RBC, banks use IP to determine the location of the client when logging into the account and blocking their account.

At least several such cases were reported by Dmitry Doroshko, a senior M&A lawyer at ASB Consulting Group. He added that this practice has been going on for a year and a half.

There have been more such cases since the end of last year, says Anton Namenov, a senior partner at Pen & Paper.

Most of the time, large banks, such as Wells Fargo, resort to blocking by IP address, the lawyer explains. According to him, OFAC recommends blocking accounts when attempting to make payments from sanctioned territories.

However, not all of the territory of the Russian Federation is subject to these rules. Along with Cuba, North Korea, Syria and Iran, the restriction applies to part of the territories in the Luhansk and Donetsk areas, as well as to the territory of the Crimean peninsula, Imenov explains.

At the same time, banks have the authority to block accounts of Russian IPs in accordance with Order 14071 and OFAC clarifications of March 2022, says Denis Primakov, head of the Compliance and Sanctions Law practice at KIAP law firm.

This document introduces a ban on the provision of financial and legal services to persons located in Russia.

“This is due to the fact that the US sanctions legislation is based on the concept of “persons in Russia”, i.e. the connection is not with citizenship, but with location. None of the clients questioned the banks’ decisions,” concluded Dmitry Doroshko.