US allows JPMorgan to process payments for Russian grain exports instead of connecting to SWIFT – Reuters

The United States gave JPMorgan permission to process payments for agricultural exports via the Rozselkhozbank [Russian Agricultural Bank], but the arrangement was no substitute for reconnecting the bank to the SWIFT system.

Source: Reuters, citing sources

Access to the SWIFT payment system is one of Russia's main demands in negotiations over the future of the Black Sea grain export deal.

The Kremlin has repeatedly warned the deal will not be renewed beyond 18 May unless the West removes obstacles to Russian grain and fertiliser exports, including the financing and insurance of exports.

A Russian source, who spoke on condition of anonymity, said the US Office of Foreign Assets Control had allowed JPMorgan to process the transaction.

Quote: "JPMorgan received permission from OFAC to carry out payment for agricultural procure – but the process is difficult," said the first Russian source.

A second Russian source said that JPMorgan and Russian Agricultural Bank, which is under US and European Union sanctions, were both specifically given exemptions to execute a single transaction.

It involved grain and was denominated in US dollars, according to the second Russian source. A third source also said the transaction was for grain.

Reuters could not ascertain who the exporter was or the destination of the supply.

The JPMorgan route was proposed as an alternative to reconnecting the Russian Agricultural Bank to SWIFT, but could be terminated at any time, the first Russian source said. 

According to one of the sources, this cannot replace SWIFT.

Another source familiar with the transaction said the US State Department and US Treasury had asked JPMorgan to carry out the "very limited and highly monitored" transaction in relation to the export of agricultural materials, which occurred this month.

The day before, Russian Foreign Minister Sergey Lavrov said at a UN briefing on Tuesday that one bank "kindly agreed to finance one operation", but this is an unacceptable long-term decision. Lavrov did not specify the name of the bank.

Background: Russian Agricultural Bank was disconnected from the SWIFT system as part of the sixth package of EU sanctions in June 2022.

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