The United States and its allies on Saturday (local time) announced to remove Russian banks from the SWIFT messaging system in response to Moscow’s invasion of Ukraine. “We commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada, and the United States, said in a joint statement. “We commit to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions,” read the statement.
Ursula von der Leyen, president of the European Commission, said the allies would stop Russia from “using its war chest,” by paralysing the assets of its central bank. They also agreed to freeze its transactions and prevent the central bank from liquidating its assets. She added there would be a crackdown on so-called “golden passports” that “let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems”. “We commit to ensuring that a certain number of Russian banks are removed from SWIFT. We will paralyze the assets of Russia’s central bank. This will freeze its transactions,” said the president of the European Commission.
SWIFT is the acronym for the Society of Worldwide Interbank Financial Telecommunication. The Belgian-based co-operative is used by thousands of financial institutions in over 200 countries, including Russia, and provides a secure messaging system to facilitate cross-border money transfers. The statement said that the leaders are committed to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government.
“Specifically, we commit to taking measures to limit the sale of citizenship–so-called golden passports–that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems,” the statement said.
The leaders, in the statement, said that they are committed to launching a transatlantic task force this week that will ensure the effective implementation of their financial sanctions by identifying and freezing the assets of sanctioned individuals and companies that exist within their jurisdictions. “As a part of this effort, we are committed to employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers to identify and freeze the assets they hold in our jurisdictions. We will also engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world,” the statement said.
The leaders further reiterated their support for the Ukrainian people in this “dark hour”. The Biden administration has already sanctioned five Russian banks, including Sberbank and VTB Group, which collectively account for about half of the country’s banking assets. Russia had over 360 licensed banks at the start of the year. By targeting the central bank, the U.S. could complicate the enactment of monetary policy while removing a potential source of cash for the government.