Western powers have decided to ban Russia from the SWIFT banking payments system as part of the sanctions against the Government of President Vladimir Putin for invading Ukraine, it was announced during the weekend in a joint statement from countries adopting the measure.
The United States, the United Kingdom, European Union, and Canada have agreed to advance on this path to further isolate Putin from the global community. Russia is said to be highly dependent on SWIFT for its key oil and gas exports.
The assets of Russia’s Central Bank will also be frozen, which would limit access to overseas reserves.
SWIFT – Society for Worldwide Interbank Financial Telecommunication – was set up in 1973 as a secure messaging system that allows around 11,000 financial institutions to clear payments. Run as a co-operative by 2,000 member banks, it is based in Belgium and handles about 40 million transactions each day.
Russia’s banks have announced they would use other channels such as messaging apps, cryptocurrencies, and routing payments via countries that have not imposed sanctions. But western powers said they would also take action to prevent those alternatives from being adopted, including access by Russian oligarchs to golden passports which would make them citizens of other countries so as to avoid falling under the scope of these sanctions.
SWIFT bans have been used in the past. When applied against Iran, the Asian country reportedly lost 30% of its foreign trade.
Russia's exclusion from SWIFT is expected to significantly damage Russia's ability to conduct business globally. The measure is hoped to become effective within the coming days.
Japan was not among the western powers approving of these sanctions.
Russia's war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending, the joint statement reads. We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.
We commit to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government, the statement also reads.
An international task force will also be created to identify and freeze the assets of Russian elites and their families within the jurisdiction of each nation to ensure the effective implementation of our financial sanctions.
We stand with the Ukrainian people in this dark hour, the statement reads. Even beyond the measures we are announcing today, we are prepared to take further measures to hold Russia to account for its attack on Ukraine, the statement went on.