Global financial-messaging network SWIFT will not unplug either Russia or Israel from the system unless the European Union officially adopts appropriate sanctions, the organization said on Monday (Oct. 6).
In August, U.K. leaders reportedly proposed blocking Russian financial institutions from access to SWIFT, ahead of an E.U. summit that included discussions of sanctions against Russia because of its actions in the Ukraine, but the SWIFT idea wasn’t adopted. More recently, pro-Palestinian groups have lobbied SWIFT to disconnect Israeli banks from the network.
But Brussels-based SWIFT said in the statement Monday that it wouldn’t take unilateral action in either case.
“SWIFT services are designed to facilitate its customers’ compliance with sanctions and other regulations, however SWIFT will not make unilateral decisions to disconnect institutions from its network as a result of political pressure,” the statement said. “As a utility with a systemic global character, [SWIFT] has no authority to make sanctions decisions. Any decision to impose sanctions on countries or individual entities rests solely with the competent government bodies and applicable legislators. Being EU-based, SWIFT complies fully with all applicable European law. SWIFT will not respond to individual calls and pressure to disconnect financial institutions from its network.”
The organization also said it “regrets the pressure, as well as the surrounding media speculation, both of which risk undermining the systemic character of the services that SWIFT provides its customers around the world.” SWIFT connects more than 10,500 financial institutions globally.
SWIFT has cut off countries as part of international sanctions in the past. Under European sanctions in 2012 intended to cut off funding for Iran’s nuclear energy program, SWIFT services were suspended for all Iranian banks. Transactions in South Africa were also blocked in the 1980s as part of sanctions designed to overturn apartheid.
While nationwide sanctions against Russia haven’t been put in place, the U.S. sanctioned some Russian banks in the wake of the Ukraine actions. As a result, Visa and MasterCard cut off Russian clients associated with those banks; in response, the Russian government required the card brands to pay a $3 billion security deposit to the Russian central bank by Oct. 31 unless they switch to using a Russian national payment system that hasn’t yet been completed. (A bill to expend that deadline until March 31 was last week in the Russian parliament.)
Some Russian banks have also begun to issue China UnionPay credit cards. Russian bankers are also proposing completely switching Russia away from dollar payments; working with China to set up an international ratings agency separate from U.S.-based Fitch, Standard & Poor’s and Moody’s; and creating a domestic money transfer system to eventually replace SWIFT.