G7, EU discuss sanctions to target ‘Russian SWIFT'

The G7 countries and the European Union (EU) are discussing the ways to target third-country banks that allegedly help Russia evade sanctions, Bloomberg said citing sources.

According to them, these measures would target third-country financial institutions using the Bank of Russia’s Financial Messaging System (SPFS) which replaced SWIFT. It is reported that the discussions are ongoing ahead of the G7 summit this month, where "a set of measures to better enforce sanctions imposed on Russia" would be considered.

Bloomberg recalled that the EU was drawing up a new package of anti-Russian restrictions, which will include a ban for its member states to use the SPFS system, which already operates in some 20 countries, including Armenia, Belarus, Kazakhstan, China, and Tajikistan.

The news agency said that the EU aims to agree to the 14th package of sanctions ahead of the G7 summit, but several European countries "have pushed back against a blanket ban on SPFS over concerns that such a move could impact legitimate transactions and harm relations with third countries."

Bloomberg sources pointed out that specific restrictions that might be adopted at the G7 summit in Italy in June "were still in flux", and that countries could each adopt their own measures.

In 2014, the Bank of Russia launched the Financial Messaging System (SPFS) in test mode. The system can transmit data in the SWIFT format, but it does not depend on its channels. In 2017, the system started working in full, transmitting messages about transactions in any currency. Initially, it was meant only for users inside Russia, though by February 2022 more than 20 Belarusian banks, credit organizations from Armenia, Kazakhstan, Tajikistan, Kyrgyzstan, Cuba and other countries had joined it.

Last March, the Bank of Russia published a report which said that SPFS had 556 participants from 20 countries as of 2023 year-end.