Diplomatic decisions taken by the European Union, in consultation with the United Kingdom, Canada and the United States, bring SWIFT into efforts to end this crisis by requiring us to disconnect selected banks from our financial messaging services. As previously stated, [SWIFT] will fully comply with applicable sanctions laws.[1]
- Pressure from the UK was influential in building international consensus to support
this action. On 25 February 2022, the Prime Minister, on a phone call with other NATO
leaders, urged leaders to take immediate action regarding SWIFT to inflict “maximum
pain” on President Putin and his regime.[2] On the same day the Defence Secretary, Rt
Hon. Ben Wallace MP, said:
We would like to go further. We’d like to do the Swift system–that is the financial system that allows the Russians to move money around the world to receive payments for its gas–but [ ... ] these are international organisations and if not every country wants them to be thrown out of the Swift system, it becomes difficult.[3]
- Natasha de Terán, a payments policy expert who gave evidence to us, described four
elements necessary for international transfers to take place: the communications layer, an
underlying economic incentive, willing counterparties, and an exchangeable currency or
mutually acceptable assets. She described how removing the communications layer from
Russian entities could complicate but not necessarily stop all international payments:
The communications layer [such as SWIFT] is just one of those factors, but so long as there is the economic incentive and there are counterparts, you will sort out the other two things. That said, there is a question of scale. If I am a bank and I need to do a billion dollar oil transaction, I can make that possible by setting up a leased line and by sending a fax. It is problematic. It is risky, because clearly if I tell another bank to act on the receipt of a fax I am opening myself up to fraud and other risks. It is cumbersome. You cannot do an awful lot of low-value transactions that way, so it messes things up, but it only messes things up and complicates things in a terminal sort of way—if that is the aim—if that bank is subject to really multilateral sanctions. That takes us into the application of US secondary sanctions, which are probably the most exhaustive sanctions that there could be. We have not seen those exercised yet.[4]
- Alongside the sanctions imposed by the UK’s international partners on SWIFT, there have also been sanctions imposed by different jurisdictions on individual Russian financial institutions. A complex and sometimes unclear regime has resulted.[5] Not all Russian banks were subject to sanctions from the outset. Tom Keatinge, Director at the
- ↑ SWIFT, An update to our message for the SWIFT community, 2 March 2022, accessed 15 March 2022
- ↑ Prime Minister’s Office, Press release: PM call with NATO leaders: 25 February 2022, 25 February 2022, accessed on 16 March 2022
- ↑
- ↑ Q5
- ↑ Dr Walker Q11. See also infographic prepared by ACAMS setting out comparative measures as at 4 March 2022.
