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An Analysis of the Potential Implications of a SWIFT Ban on Russia


A fortnight on from the Russian invasion of Ukraine, in this article we take a look at the most recent updates to regional sanctions on Russia and its allies. With varied attitudes to the adoption of a SWIFT ban and a growing intensity of discussions between allied nations on the subject, we offer valuable insight into SWIFT and the implications of a ban.



Active as of 12th March 2022, the European Union in close co-ordination with the UK and US have agreed to a removal of key Russian banks from the SWIFT network. The sanctioned banks are: Bank Otkritie, Novikombank, Promsvyazbank, Sovcombank, Vnesheconombank (VEB), Rossiya Bank and Vneshtorbank (VTB). EU President Ursula von der Leyen said “Today’s decision to disconnect key Russian banks from the SWIFT network will send yet another very clear signal to Putin and the Kremlin”1. Sberbank and Gazprombank have not been included in this ban, which is probably due to their involvement in payments for gas and oil exports to Europe.



What is SWIFT?

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is an encrypted messaging system that is used globally by banks to co-ordinate cross-border payments. Used by 11,000 institutions in over 200 countries, SWIFT is relied upon to provide secure communications between financial entities, which enables rapid and trusted transactions across the globe. If a country were to be removed from the system, their government and any businesses would experience significant challenges in facilitating cross-border transactions2.


How much does Russia rely on it?

With a reported 40 million messages per day on the network, over 1% of communications are either to or from Russian entities3. That’s at least 400,000 daily messages that will not be transmitted via SWIFT if a ban is put in place. As one may expect, Russia has its own internally-developed banking system, so in the short-term Russian citizens will still be able to do business with one another with little to no effect. This system is called System for Transfer of Financial Messages, but is limited to only 400 banks in a handful of countries4. Although Russia may be relying on this system as a workaround, it remains to be seen whether foreign entities that currently use it will be willing to continue to do so given the current and developing sanctions situation.


What is being threatened and what is the impact on Russia?

Imagine a scenario where you have a multi-national business, relying on supply chains that spread across the globe for successful operations. If your business was suddenly relieved of its privileges to transact with non-local businesses, the operation would soon fall apart due to logistical issues, leading to financial collapse. Russian businesses are facing this as a real possibility due to a potential SWIFT ban. German and Italian ministers have shown reluctance to ban Russia from SWIFT, mainly due to their reliance on Russian business, and how cutting the country off will impact their supply chains5. In short, any country that does business with Russia and relies on their mutual connection to the worldwide financial markets will be negatively affected by a removal of their access. So, the key question is, to what extent are governments willing to stunt their own resources in order to fight back against Russia?


UK sanctions update

The UK government has announced further restrictions to be placed upon Russia with immediate effect. In coordination with the Bank of England, the Chancellor of the Exchequer announced a “determination to apply severe economic sanctions in response to Russia’s invasion of Ukraine (…) in rapid coordination with our US and European allies”6. Following a raft of sanctions announced by the government last week, which we discussed in detail here, the new restrictions reinforce earlier measures by targeting the Central Bank of the Russian Federation.


New sanctions cover:

Restrictions to prohibit UK nationals from participating in financial transactions involving the Central Bank of the Russian Federation, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation

Preventing designated banks from accessing GBP and clearing UK payments.

Revoking access to UK markets for designated banks

Prohibition on the export of technical goods in critical sectors

All sanctions will apply to Belarussian entities that have supported the Russian invasion in any way7


As we await official announcements on allied SWIFT measures against Russia, financial institutions around the world must also prepare themselves for other sanctions, which we detail in our blog here.


As specialists in financial crime prevention, EFI have experience of optimising our clients’ processes and addressing the operational challenges associated with changing financial crime regulations. We stand ready to assist our clients with the challenge of keeping up with the ongoing changes to sanctions at this difficult time.


For a full list of current sanctions, see the graphic below from ACAMS8, correct as of 4th March 2022.



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