Against the backdrop of ongoing geopolitical restrictions, leading financial institutions are facing the need to adapt their cross-border payment services. Traditional direct transfer models have, for many Russian companies actively engaged in foreign economic activity (FEA), turned into a high-risk environment.
Since the introduction of the first sanctions in March 2022, there has been a steady shift of business away from restricted jurisdictions toward so-called “still accessible” countries. However, as these “safe havens” are gradually exhausted, direct cross-border payments have become increasingly complex and risky. In response, the market has actively adopted solutions involving payment agents and intermediaries.
Key Models of Agent-Based Cross-Border Payments
In practice, three main structures have emerged:
1. Agents from “friendly” jurisdictions
This model involves intermediaries located in countries where both ruble and foreign currency transactions remain possible. Initially, Kazakhstan and Armenia were widely used, but Kyrgyzstan has recently become the primary hub. A sending bank transfers rubles to the agent’s account in a friendly jurisdiction, and the agent subsequently executes the payment in foreign currency to the final beneficiary.
2. Foreign agent companies with resident accounts in Russia
This structure involves foreign legal entities holding non-resident accounts in Russian banks. Such companies can move funds between their own accounts in different jurisdictions, thereby indirectly facilitating payments for Russian clients.
3. Russian exporters with foreign assets
Companies with accumulated export revenues or other funds held abroad may use these resources to make international payments on behalf of other clients.
Operational Specifics of Payment Agents and Partners
In many cases, payment agents themselves do not directly execute cross-border transfers. Instead, they rely on intra-group entities or third-party partners. Netting schemes are widely used, where incoming funds from abroad for one client are offset against outgoing payments for another. This reduces cross-border money flows, lowering transaction costs and operational risks.
Risks and Unfair Practices
Despite their apparent attractiveness, agent-based payment schemes carry significant risks:
- Delayed settlements: payments may initially be processed quickly but later become subject to indefinite delays.
- Loss of funds: amounts may be lost due to correspondent banking issues, restrictions, or breakdowns in netting balance mechanisms.
- Fraud: in some cases, agents have directly misappropriated client funds, resulting in irreversible losses.
Even in cases of bona fide intermediaries, payment disruptions may sometimes be resolved through alternative routing or refunds. However, currency fluctuations and fees for failed transactions are typically borne by the client.
Banking Distance and Liability Issues
It is important to emphasize that, with rare exceptions, such agent services are not formally connected to banks. Banks generally do not bear responsibility for the actions of payment agents. Any promotion of such services by bank employees is likely driven by internal policies aimed at minimizing client claims and avoiding direct liability for cross-border transaction risks.
Viktor Mironov
Managing Director, Partner at TEAM
Read the TEAM director’s commentary in Delovoy Petersburg article:
“St. Petersburg LLC ‘GC APP SMT’ sues Kyrgyz payment agent for 22.2 million rubles. The dispute is related to blocked funds sent to Europe.”
According to the largest national study of the legal market in Russia — the Pravo-300 ranking — Viktor Mironov is listed among the leading Russian consultants in the field of foreign economic activity / customs law / currency regulation.