Tbilisi Tries to Attain Abkhaz Bank System

Suspicion lingers over whether or not Russia is complying with a request made by the Georgian authorities regarding Abkhaz bank accounts. Upon taking over the office of Georgian National Bank(NBG) president in April, one of Roman Gotsiridze’s first actions was to demand that the Russian and Kyrgyz central banks block correspondent accounts of the banks in breakaway Abkhazia. Though the Russian side has announced the closure of these accounts, some doubts still remain about the validity of this statement.

“As a member of the Financial Action Task Force on Money Laundering (FATF), Russia has been violating international norms, and has meddled in Georgia’s internal affairs. Russia was so impudent that a branch of a Russian bank in Sochi delivered pensions to Russian citizens in Sukhumi quite openly,” the President of NBG told Civil Georgia. 

Gotsiridze has also alleged that about 50 Russian banks, both state and commercial ones, are currently engaged in the illegal activities in Abkhazia. Abkhaz banks are also part of the Russian regional network payment system “Zolotaya Korona” (Golden Crown) – the biggest smart-card system in Russia.

Tbilisi’s demand to block correspondent accounts is based on a 1996 agreement signed at a Commonwealth of Independent States summit, which states that all kinds of economic activities carried out on the territory of Abkhazia without the Georgian government’s consent are considered illegal. The Georgian National Bank is ready to play the role of mediator between the Abkhazian banks and their potential partners abroad and avoid an economic blockade of Abkhazia in this way.

“Russia may support its citizens in Georgia [in Abkhazia],” Gotsiridze assures, “but it has to carry out such actions through the administration of the NBG.”

Gotsiridze raised these problems at the annual meeting of Presidents of Central Banks from Central Asia, the Balkan States, and the Black Sea region countries, which was held in St. Petersburg, Russia, on May 27-28 and demanded that this illegal activity be stopped in Abkhazia. Otherwise, he warned, these problems would be settled through FATF, which designs the ground rules for the fight against money laundering.

Shortly after this official demand of the Georgian side, news agencies in Abkhazia reported that Russia had closed down accounts in the breakaway region. Gotsiridze says that this was a “pleasant surprise.”

“I can’t predict how long this ‘happiness’ will last, but it’s really a constructive step,” he said. 

But news broke shortly after Abkhaz President Sergey Bagapsh visited Moscow in late June that Russia will again re-open the accounts of the Abkhaz banks. The Georgian daily 24 Hours published an article on July 18 titled “The Failed Bank Crisis,” in which it is stated that the Abkhaz bank accounts were never blocked by the Russian side.

But Roman Gotsiridze is optimistic. “I met with representatives of two international organizations – I don’t want to name them – just recently in Batumi. And they claim that they couldn’t transfer money through Russia to their branch-offices operating in Abkhazia. They are interested in executing these transfers through a Georgian commercial bank, if possible,” Gotsiridze said.

A similar problem persisted with Kyrgyzstan as well. But, unlike Russia there are no uncertainties in the dealings with the Kyrgyz side. Those Kyrgyz banks which operated in Abkhazia sent an official letter to NBG in early July confirming that they had ceased their activities in the unrecognized republic.