VTB, the second largest bank in Russia, has introduced a new platform which will allow both individuals and companies to transfer funds to and from the Islamic Republic of Iran, the bank announced on 19 December.
The state-run bank, which has been targeted heavily by western sanctions since the start of the Russian operation in Ukraine, has become the first banking institution in Russia to provide such a service to Iran, which has – for years – also been struggling through harsh sanctions and international restrictions.
“We are the first bank that implements financial transfers to Iran due to the commercial relations [between Iran and Russia], the expansion of economic cooperation and the development of tourism,” the VTB announcement read.
However, a report released by Russian newspaper Kommersant states that VTB “has a history of financial transactions with Iran,” but was forced to suspend cooperation in 2014 after being fined 9.5 million dollars for “violating banking sanctions.”
As part of this new cross-border system, VTB has said that the owners of small and commercial accounts will be allowed to transfer amounts of up to $300,000. Additionally, all transactions will be subject to a one percent tax, and the transfer of credit takes within one day to be completed.
It has also asked its customers to buy foreign currency on VTB’s smartphone application.
According to VTB’s vice president, Denis Valvachyov, transactions between Russia and Iran under this system are “in high demand.” Valvachyov also suggested that that the platform “will strengthen economic cooperation and boost tourism between the two countries.”
Payments within the service are reportedly already available to VTB clients in over ten countries, and next year, the bank is planning to expand transaction services to encompass all ‘friendly’ nations, meaning particularly those who stood against the imposition of sanctions on Moscow.
The launching of this service comes within the broader framework of Russian-Iranian cooperation – particularly in the field of finance, banking, and trade – a framework under which Moscow and Tehran have been mutually working to build an economic roadmap independent of western hegemony and harsh sanctions.
As part of this cooperation, Russia and Iran have been working to establish methods to alleviate the sanctions that target them, including the potential linking of card payment systems. Iran has also boosted its role as a transit hub by facilitating the transportation of goods from Russia to India via the International North-South Transit Corridor (INSTC).