EU, UK, Canada, US pledge to remove selected Russian banks from interbank messaging system SWIFT

WASHINGTON — The U.S., European allies and Canada agreed Saturday to remove key Russian banks from the interbank messaging system, SWIFT, an extraordinary step that will sever the country from much of the global financial system.

“This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the global powers wrote in a joint statement announcing the significant retaliatory measure.

Moscow’s exclusion from SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, means Russian banks won’t be able to communicate securely with banks beyond its borders. Iran was removed from SWIFT in 2014 following developments to Tehran’s nuclear program.

SWIFT is an independent enterprise based in Belgium that serves as an internal messaging system between more than 11,000 banks and financial institutions in over 200 countries and territories.

“Any decision to impose sanctions on countries or individual entities rests solely with the competent government bodies and applicable legislators,” SWIFT said in a statement. “Being incorporated under Belgian law, our obligation is to comply with related EU and Belgian regulation.” The group said it’s seeking details on the entities the new effort will impact.

After the announcement, Ukrainian Prime Minister Denys Shmyhal welcomed the measure, writing in a tweet, “Appreciate your support and real help in this dark time. Ukrainian people will never forget this! Keep holding the line! We are on our land.”

In addition, the U.S. and its allies announced that they will impose restrictive measures aimed at preventing Russia’s central bank from deploying its international reserves in ways that may undermine sanctions.

“This will show that Russia’s supposed sanctions proofing of its economy is a myth. The $600 billion-plus war chest of Russia’s foreign reserves is only powerful if Putin can use it,” a senior administration official said on a call with reporters Saturday evening.

The official, who spoke on the condition of anonymity in order to share new details on Washington’s position, said the impact of these sanctions will be felt immediately in Russia.

“You will immediately see a chilling effect fall over the Russian banking sector even beyond what’s already occurred,” the senior administration official said. “We’ve now targeted all 10 of Russia’s largest financial institutions, holding nearly 80% of the Russian banking sector’s total assets,” the person added.

When asked if the U.S. had any indication if China, the world’s second-largest economy, would financially assist Russia amid punishing sanctions, the official said “China’s not coming to the rescue.”

“China is actually restricting some of its banks to provide credit to facilitate energy purchases from Russia, which suggests that much like has been the pattern for years and years, China has tended to respect the force of U.S. sanctions,” the official said.

The leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada and the U.S. also plan to limit the sale of so-called golden passports. The official described them as a loophole that allows wealthy Russians connected to the Kremlin to become citizens in other countries and access certain financial systems.

“We will go after their yachts, their luxury apartments, their money and their ability to send their kids to fancy colleges in the west,” the official added.

The announcement follows rounds of joint sanctions imposed against Russia for its unprovoked assault on Ukraine.

On Friday, the U.S. alongside the United Kingdom and the European Union announced sanctions against Russian President Vladimir Putin and Russian Foreign Minister Sergey Lavrov. In the weeks leading up to the invasion, the Biden administration threatened sanctions in the hopes of deterring Putin from further aggression against Ukraine.