SWIFT and Russian business

Sanctions pressure leads to the fact that today SWIFT stops working with an increasing number of banks, and not only Russian banks. What is SWIFT and what is the threat? SWIFT (an abbreviation for Society for Worldwide Interbank Financial Telecommunications) is an international system for transferring information and payments between banks. In essence, it is a large financial messenger, a kind of channel that provides communication between financial organizations. Disabling this system for Russian banks means the impossibility of communication with other banks. But not an absolute impossibility, but only a ban on communication using the SWIFT system. Of course, there are analogs that perform the same functions.

Thus, back in 2014, with the introduction of the first sanctions, the Central Bank of the Russian Federation developed and launched its own system of financial messaging (SPFS), which is successfully operating and gaining momentum both inside Russia and abroad. The total number of SPFS participants and their names are not disclosed, but according to the Central Bank's public data, it already includes about 500 participants from 14 countries. But, unfortunately, it is still impossible to completely avoid using SWIFT. Therefore, it is necessary to look for banks that have not fallen under sanctions.

From October 1, 2023, the CBR prohibited Russian banks from making domestic money transfers using SWIFT, obliging them to use the SPFS or other similar systems of Russian origin.

Not only Russia has its own financial messaging systems. It is understandable: SWIFT is not only historically established and the most widespread system, but also rather inflexible in the technical sense (a long history for a software product often means outdated technology), expensive and also politically dependent.

Among global examples, one can recall Iran's INSTEX (Instrument in Support of Trade Exchanges), developed for trade with the EU to bypass American sanctions. India has SFMS (Structured Financial Messaging System). Europe has SEPA (Single Euro Payments Area) - for payments in euros from anywhere in the world.

China has had CIPS (Cross-border Interbank Payment System) since 2015, it is designed for payments in RMB. As of July 2023, this system has 1456 participants from 110 countries. In comparison, SWIFT is used by 1,100 financial institutions in 200 countries and regions. According to information from our partner banks, payments to China currently go through Chinese correspondent banks and then are processed domestically in the CIPS system.