international finance sanctions
Why do VISA and MasterCard comply with U.S. sanctions that erode their business?
<p>On what basis does the U.S. government prohibit American companies like VISA, MasterCard, PayPal, et al, from doing business on the Crimean Peninsula?</p>

<p>Crimea is connected with, and backed by, the whole of Russia, which in turn is connected with China, with both being part of BRICS.</p>

<p>The fact that Visa and MasterCard could not be used all across Russia would naturally make Russian banks start transitioning to more friendly payment processors like Sberbank's Pro100 and China's UnionPay.  This, in turn, will simply erode the influence that American companies have across the whole of Russia (and also across the globe as more people switch to UnionPay, which is nowadays accepted in a whole lot of places including America), not simply the small area actually subject to the sanctions.</p>

<p>Aren't all of these companies like VISA and MasterCard actually incorporated in the Bahamas, etc., anyways?  Why do they comply with the request for sanctions?  What would happen if they don't comply?  What would they have to do to not be legally required to comply?</p>

<p>See also: </p>

<p><a href="http://www.bloombergview.com/articles/2014-05-06/the-biggest-loser-from-russia-sanctions-visa" rel="nofollow">http://www.bloombergview.com/articles/2014-05-06/the-biggest-loser-from-russia-sanctions-visa</a></p>

<blockquote>
  <p>The Chinese experience inspires Putin's advisers: UnionPay, whose cards are accepted in 135 countries, is now bigger than Mastercard and second only to Visa in processing volume. </p>
</blockquote>

<p><a href="http://www.sec.gov/Archives/edgar/data/1403161/000119312507212797/dex31.htm">Visa is incorporated in Delaware.</a> <a href="http://investor.mastercard.com/files/doc_downloads/organizational_documents/Certificate-of-Incorporation-of-MasterCard-Incorporated.pdf">So is MasterCard.</a> In addition, both are headquartered in the US, have huge quantities of assets in the US, do lots and lots of business in the US in a highly regulated sector, and their very <em>existence</em> depends on their ability to interact with the US banking system.</p>

<p>The US has the authority to regulate all of these things, under literally any definition of sovereignty. Therefore, they must comply with sanctions.</p>

<p>The U.S. can't make a company "give away" market share.</p>

<p>The U.S. does have the right to prevent a company from doing business in countries X and Y, in line with its foreign policy or other legal (e.g human rights) mandates.</p>

<p>It is then up to the company to design its business plan so that it is not dependent on revenues from countries X and y.</p>
