What will happen to banks and people if SWIFT is turned off. For example, due to sanctions

[Carder]

A new whirlwind of anti-Russian sanctions could seriously affect the country's economy. The fact is that the United States intends to disconnect Russia from SWIFT, an international system for the exchange of financial flows and messages.

It is needed so that banks can quickly and with maximum security transfer payments to all countries. Payments are sent in the established format, which significantly increases the speed of the transfer, reduces the commission and makes the transfer secure. The number of SWIFT participants is over 11 thousand companies and banks. Russian banks rank second in terms of the number of payments and 15th in terms of the volume of transactions.

To date, the practice has only one case of disconnecting a country from SWIFT. It was Iran in 2012. The European Union has complied with US regulations. The country suffered significant financial losses, however, it was not broken. The disconnection of Russia from SWIFT also brings financial isolation and a halt to various financial processes related to imports and exports.

If the sanctions are nevertheless introduced, they will affect some banks, and there are more than 500 of them in Russia. While some rush into panic and say that disconnecting from SWIFT is the collapse of the country's financial system, others are confident that Russia can do without it. due to the presence of its own software - SFPS, developed jointly with the BRICS countries.

Article content

• SWIFT situation.
• Can I send money abroad without SWIFT?
• What operations will be unavailable when disconnected from SWIFT?

SWIFT situation

The new package of anti-Russian sanctions adopted by the US Congress caused a wave of indignation and fear. Washington announced the possible disconnection of Russia from SWIFT services. Despite this, Moscow remains calm, as the SPFS (system for transfer of financial messages) system can be tried as an alternative. More than 300 Russian banks are already working on it. The BRICS countries are gradually joining it. SPFS is not subject to external influences, which will ensure its stability. However, like the Russian Mir system, SPFS is damp.

While Europe refuses to comply with the US order to disconnect Russia from SWIFT. This will be regarded as a declaration of war, and since Russia is still a nuclear power, such actions can lead to "bad" consequences.

Disconnecting Russia from SWIFT is the second step in anti-Russian sanctions from the White House. The first is that Washington wants to prohibit American companies from buying up federal loan bonds (OFZ) and stop operations with existing Russian securities. Considering that about 40% of OFZs are owned by foreign investors, a massive outflow from this instrument could bring down the ruble again. The situation of disconnection from SWIFT can affect almost every person who uses SWIFT to quickly exchange payment messages.

Without notification of transactions, payments will take longer and more expensive, which is not beneficial for either business or an ordinary user. The head of the Central Bank E. Nabiullina said that in case Russia is disconnected from SWIFT, 90% of domestic ATM terminals are ready to service cards of the Russian payment system Mir. At the same time, it is silent that the World is a young system. Abroad, payments are made using the Maestro system, which has enough restrictions and limits.

Thus, the likelihood of Russia disconnecting from SWIFT is small, but it is becoming more and more real. European countries do not want such a turn of events, because they also use this system. Here we are not talking about the disconnection of a particular country, but about the fact that any state may be subject to sanctions due to any political or economic considerations. Almost all countries will see that they are their economic independence - it is just an appearance that does not have a solid foundation.

Many experts are sure of one thing, that cash flow will not decrease, but will be redirected to less reliable and controlled systems that are difficult to assess. And this, in turn, will be in the hands of terrorists and cybercriminals.

Can I send money abroad without SWIFT?

There are alternative ways. Let's consider the most optimal ones:

• From card to card. Russian banks often use card-to-card turbo transfers. So, from a Russian bank card, you can send money to a card of another state, knowing only its number.
• Electronic payment systems. Yandex.Money, WebMoney, Qiwi work in many foreign countries. Transfers are made directly from home. It is enough to have access to the Internet, a card and a virtual wallet. The whole process takes no more than 10 minutes, and the speed of money transfer is almost instantaneous. The recipient also withdraws from the wallet to his foreign account or card and withdraws money. The disadvantages are the still high commission for large amounts and there are limits on transfers.
• International money transfer systems. They are among the fastest and most popular, and also work in all countries of the world. These include Western Union, Money Gram, Contact, Zolotaya Korona. To send, it is enough to indicate the name of the recipient, the amount and the country. After sending, the sender receives a control number, which he informs the recipient. At the nearest service point, the recipient indicates the number and receives the transfer. Delivery speed varies from 15 minutes to a day. The maximum amount for one transfer cannot exceed $ 5,000 or its equivalent in another currency.
• Cryptocurrency. This is the newest and most talked about option for sending money anywhere in the world. While some are wary of it, others are already active users who have managed not only to get a cryptocurrency, but also to make money on the growth of its rate. For transfers in cryptocurrency, you need to install the wallet on your PC. Next, the selected cryptocurrency, for example, bitcoin, is purchased on the exchange and forwarded to the recipient's wallet. While in Russia, the attitude towards bitkons is ambiguous. At the legislative level, currency is prohibited. The country's authorities do not trust the “air currency, which is not tracked, has high volatility and is not backed by real assets.

Thus, if SWIFT is disabled, transfers from Russia and to Russia can still be sent in other ways, however, this will suspend the cash flow.

What operations will be unavailable when disconnected from SWIFT?

At first, the flow of transfers in foreign currency will dry up. It is clear that it is impossible even technically to turn off all Russian banks, so the main stream will be diverted to the banks remaining in SWIFT. Interbank communications will also stop. SWIFT works as a kind of "chat", where banks decide in what way the cash flow will be forwarded, where problems with transfers are solved, and so on.

As you know, the European ban on the delivery of animal and plant products to Russia has led to an increase in the production of dairy and meat products. In the case of SWIFT and the desire of the United States to “strangle” the financial segment, the effect can be reversed.

If Western partners do not want to cooperate with Russia, then there are partners in the East. Together with the BRICS countries, Russia is able to create a “local” SWIFT, which will already deal a blow to the finances of the West and the United States. The new analogue will no longer be able to be controlled like SWIFT, so this scenario is unlikely to please the initiators of anti-Russian sanctions.

 

[Lord777]

SWIFT Transfer System Overview

What is SWIFT and how did it come about?
The abbreviation SWIFT stands for Society for Worldwide Interbank Financial Telecommunications. In translation, this means "Community of global Interbank financial telecommunications", whose main purpose is to transfer information and make payments in an international format. The prerequisites for the creation of the SWIFT system were noticed in the early 50s of the 20th century, when, a few years after the Second World War, states began to engage in active trade at the international level. As a result, this led to a sharp increase in banking functions and operations. Previously, communication between banks was carried out by mail and telegraph, but new conditions dictated new rules – such methods of transmitting information have become ineffective due to the rapid increase in the volume of banking operations. Moreover, misunderstandings and errors during interbank transactions have become very common, related to the functioning systems of various banks and the lack of necessary standardization. Bankers understood that sooner or later a new way of paper exchange of financial information between all banks in the world would arise. And they were right…
The development of such a system began in the early sixties. Representatives of the sixty largest European and American banks have met several times to discuss the problem that concerns everyone-the creation of a unified system of standardization in the banking sector. For this purpose, it was decided to use precise computing equipment-computers that, as is known, provided the most efficient data transmission system of this kind.
Direct work on this system, capable of providing round-the-clock exchange of financial information with high security and under control, began in early 1968. Already in 1972, the creators prepared an official project and made the necessary calculations on the profitability of this system.
In May 1973, with the participation of 239 banks located in 15 countries of the world, a payment system called SWIFT was created and established. Its developers worked for more than four years to put this institution into practice, and on May 9, 1977, the international data network was officially launched. At the end of the same year, the number of banks willing to join SWIFT increased to 586. The community sent 450,000 emails every day.
To date, SWIFT has more than 7,000 financial institutions and banks located in 190 countries. Despite the rather large distance from each other (sometimes there is a need to transfer information from the United States to Australia), they can easily exchange messages and interact around the clock.

How SWIFT works

There are two types of messages: financial (transmitted between users of the system) and system (transmitted between users and the system).
All SWIFT messages include:

• headline
• message text
• trailer

The use of a computer terminal (CBT) makes it possible to communicate with a mainframe computer, send and receive messages, and manage application tasks. All messages are stored in the regional processor (RPG), and then sent for processing to the next operational center. SWIFT processes them there:

• checks the syntax
• creates new headers and converts messages to the outgoing form
• adds trailers
• copies and encrypts messages for storage

Verification field the sender immediately receives a notification: positive result – ASK, negative - NAK. Each message is automatically assigned an incoming number.

Advantages and disadvantages of SWIFT
Today in Russia, SWIFT is inferior in popularity to such well-known transfer systems as, for example, Western Union or Unistream, but for paying for foreign services or transferring a large amount of money to another country, it is, in fact, the most rational solution (especially for those who have a constant need to send considerable money transfers abroad).
The incredible scale of SWIFT distribution in the world allows you to make a transfer to the client account of any well-known bank, while the amount is limited only to acceptable values that do not violate the economic legislation of a particular state.
SWIFT transfers send funds not to the recipient's full name, but to specific accounts. You can always choose the transfer currency yourself. The system is also as confidential and secure as possible. When transferring money via SWIFT, the commission is always a certain (fixed!) the amount that will increase in the minimum proportion of the amount of transfers, which will be beneficial when transferring large amounts of money abroad.

So, the main advantages of SWIFT are as follows:

• high speed of transfer delivery. The average delivery time anywhere in the world is approximately 15 minutes for a regular message and 2 minutes for an urgent message;
• no restrictions on the payment amount;
• a wide range of currencies used by SWIFT;
• low tariffs (they are really much lower than in other systems);
• It is widely distributed and popular in the world, which allows you to make payments to almost all countries;
• guarantees of timely delivery of the transfer. SWIFT will cover any losses incurred by customers if the delivery time is violated due to the fault of the system.

The disadvantage is that the payment processing time is quite long – approximately 5 banking days. Also, when choosing such a transfer, be sure to take into account that although the system itself has a more or less fixed commission, the main costs will be obtained when receiving money in a bank and interbank transfer.
Moreover, the system depends on the development of correspondent relations of the bank through which you make the transfer (after all, one money transfer in SWIFT can be made by several financial organizations or banks). In addition, the cost of a transfer may be increased by the presence of intermediary banks, which arise when the transfer currency differs from the national currency of the country to which the transfer is made.

So, the main disadvantages of SWIFT are:

• mandatory submission of a sufficiently large package of documents to the bank;
• control (since 2011) over this system is provided by the US Department of State, which monitors all payments;
• there is no opportunity to become a member of the SWIFT system for small and medium-sized banks (due to the rather impressive entry fee).

What is SWIFT code and where is it used?
A SWIFT code is a unique identification code of a particular bank or any other participant in financial settlements that is used when transferring funds from one state to another between banks (which are members of the SWIFT system). The code is generated according to the following standard: ISO 9362 (ISO 9362-BIC).
SWIFT codes of banks can usually be found on the website of the bank itself (the section "banking details" or "transfers"). You can also use special reference books of SWIFT codes of banks.
It is worth noting that this code is used only in the global market. Other codes are required for conducting domestic banking operations. The identification system of banks of the Russian Federation is called "BIC". In the UK, for example, this is a "Sort Code". Of course, you can list such systems in all countries of the world, but it will be much easier to use the corresponding reference books.
Do not forget that participation in the SWIFT identification system is exclusively voluntary, so the lack of connection to it will only mean slowing down the process of international banking operations. Also, the SWIFT code guarantees complete security of a particular transfer, so the risk that the transfer will be lost between banks is minimized.