April 3 (Bloomberg) -- JPMorgan Chase & Co. is unfreezing a money transfer from a Russian embassy in Central Asia to an insurer linked to U.S.-sanctioned bank after getting a go-ahead from regulators.
“Following consultation with our regulators, we are processing this transaction,” JPMorgan said today in an e- mailed statement.
The reversal comes two days after Russia’s Foreign Ministry decried the move by the biggest U.S. bank blocking a payment from its embassy in Astana, Kazakhstan, to Sogaz Insurance Group as “illegal and absurd.” Sogaz is part-owned by OAO Bank Rossiya, a St. Petersburg-based lender under U.S. sanctions relating to the Ukraine crisis.
U.S. President Barack Obama announced the action against Bank Rossiya last month as part of a broadening of sanctions that targeted government officials and allies of Russian President Vladimir Putin, whose associates own Bank Rossiya. The embassy’s transaction was for less than $5,000, a person with knowledge of the dispute said, asking not to be identified because such transfers aren’t public.
The Foreign Ministry said “the hostile action” by JPMorgan bank was “a grossest violation of international law,” according to its April 1 statement.
A Bank Rossiya unit reduced its stake in Sogaz to 48.5 percent from 51 percent on March 11, according to a regulatory disclosure on the insurer’s website. The U.S. added Bank Rossiya and its billionaire shareholder Yury Kovalchuk to an extended sanctions list on March 20 following Russia’s annexation of Crimea.
Russia’s Finance Ministry picked JPMorgan last year to help improve the country’s standing among U.S. credit-rating firms. The bank was also short-listed to advise on the government’s privatization program.
“As with all U.S. financial institutions that operate globally, we are subject to specific regulatory requirements,” New York-based JPMorgan said in an April 1 statement. “We will continue to seek guidance from the U.S. government on implementing their recent sanctions.”