- Western bloc: EU banks massively stop accepting SWIFT payments from Russia
- What is the reason for this and what are the alternative options for transfers abroad?
According to media reports and article published by Russia's news agency, Izvestia, on October 18, 2022, one of the largest banks in Switzerland - PostFinance, Estonian LHV Bank, French Banque Populaire, and Finnish S-BANK have completely stopped accepting SWIFT transfers from Russian banks , Izvestia was told in financial organizations.
Massive complaints from Russians about the inability to send transfers to these and a number of other foreign banks appeared on the feedback platform for SWIFT transactions. Against the backdrop of tightening EU requirements for additional checks of funds coming from Russia, many foreign organizations began to block such payments on their own initiative , experts explained.
Payment will not go through
Against the backdrop of tougher sanctions against the Russian Federation, some European banks have completely stopped accepting SWIFT transfers from Russian credit institutions. The blocking of such operations to Izvestia was confirmed in one of the largest banks in Switzerland - PostFinance, Estonian LHV Bank, French Banque Populaire, and also in the Finnish S-BANK.
S-BANK stopped accepting SWIFT payments from Russia since the beginning of the special operation in Ukraine , and LHV Bank made the last such transfer at the end of August, their call centers said. Other credit institutions did not specify when exactly they began to block such transactions, but linked the restrictions to the economic situation and sanctions.
Mass complaints from Russians about the inability to send SWIFT transfers to these banks appeared on the platform for feedback on such transactions. According to the comments, in addition to these foreign credit institutions, not a single payment reached the Italian Poste Italiane bank, Swiss Credit Suisse, Swedish Swedbank and Westpac New Zealand bank in New Zealand. Westpac New Zealand Bank Support said customers can send payments to their account from foreign banks.
Most often, the money was returned back to the sender's account within 2 to 26 days and minus the commission, but sometimes the funds "disappeared" . So, one of the users wrote that after sending €2 thousand to the Italian Banca Intesa Infrastutture E Sviluppo, he did not receive his transfer even after 77 days . Another client reported that after transferring more than €3.6 thousand to the Swedish SEB pank , he was unable to return the money even after 84 days . The Credit Suisse call center said that each transfer is considered separately and it is impossible to say whether a transaction from a Russian bank will be blocked.
Izvestia sent inquiries to the press services of all these banks.
Earlier, a number of foreign financial organizations had already stopped making payments to Russia and Belarus. Thus, the Swedish Swedbank banned such transactions from May 7, and SEB from the beginning of June, the Baltic bank Luminor suspended outgoing payments to these countries also from June 1, and incoming payments a month later. Estonian Coop Pank has stopped making transfers to Russia and Belarus since April 20.
It's easier to give up
Izvestia interviewed Russian banks, which foreign financial organizations began to block SWIFT transfers from the Russian Federation, and whether there has been an increase in the volume of such payments since March 2022 and after the start of partial mobilization.
This year, the number of returns of SWIFT transfers from foreign banks has increased compared to 2021, especially when settling with European countries , said Elena Finogenova, Director of the Rosbank Operations Department. According to her, at the end of September there was also a short-term increase in such payments abroad, but in early October the situation returned to normal.
Clients often try to find out from the recipient bank whether a transfer from the Russian Federation will be accepted, so the return of funds is rare and it is difficult to say which credit institutions have become worse at accepting payments, said Alexei Skorodumov, chairman of the board of Derzhava Bank. He added: all transfers from Russia are now under manual control in foreign banks, in the absence of clear instructions from regulators in these countries, the caution factor can play a significant role in refusal.
The Central Bank did not comment on how significant the risks of a mass refusal of foreign banks to accept payments from Russia are.
Since February 2022, European credit institutions have been banned from accepting deposits of Russians in excess of €10,000, there are no other formal restrictions in Europe, however, EU regulatory requirements require additional checks for any money that comes from the Russian Federation, explained the founder of Anderida Financial Group Alexey Tarapovsky. Thus, many financial institutions on their own initiative refuse to accept SWIFT transfers from Russia, not wanting to spend additional resources on verification and fearing the risks that the accepted payment may be from a person under sanctions.
This situation is dangerous because it is impossible to predict which bank has decided to tighten the rules at the moment, and there are more and more such credit institutions now , the expert noted. He added that at the same time, the movement of funds from Russia to Europe is still taking place and the leader in transfers is Raiffeisenbank. The problem of blocking transactions can be solved by opening an account in a "friendly" country, for example, in Kazakhstan - payments are sent from there without any special difficulties and delays , said Alexey Tarapovsky.
In addition, it is possible to continue working with those banks for which the benefits of servicing Russian clients significantly exceed the costs of monitoring the risk of secondary sanctions , said Valery Piven, Senior Director, Head of the Financial Institutions Ratings Group at ACRA. According to him, sanctions risks have become the main factor in the growth in the cost of SWIFT operations. At the same time, the increase in demand for such transfers is associated with a ban on the use of foreign payment systems.
As an alternative to SWIFT, DFA technology is also being developed at the moment , said Elena Peterson, director of the forensic department at Kept (formerly KPMG). In addition, separate independent settlement mechanisms are being created with Iran, India, China and Turkey .
