Governments impose banking restrictions on Russia

The sanctions announced over the weekend (26 February), introduced following Russia’s invasion of Ukraine, are designed to ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.

The SWIFT system’s principal function is to serve as the main messaging network through which international payments are initiated.  

The governments have also committed to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that could undermine the sanctions. 

Additionally, they will launch a transatlantic task force to ensure the effective implementation of the financial sanctions by identifying and freezing the assets of sanctioned individuals and companies that exist within their jurisdictions. 

And today (28 February) the UK government has announced further economic sanctions, taking restrictive economic measures targeted at the Central Bank of the Russian Federation (CBR). The action has been taken in concert with the US and European Union to prevent the CBR from deploying its foreign reserves in ways that undermine the impact of its sanctions. 

The UK government has said it will take steps to prohibit any UK natural or legal persons from undertaking financial transactions involving the CBR, the Russian National Wealth Fund and the Ministry of Finance of the Russian Federation. 

The government will also place restrictions on Russian financial institutions and introduce measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK. Alongside this, it has introduced powers to prevent designated banks from accessing sterling and clearing payments through the UK. 

Commenting on the news, chancellor Rishi Sunak, said: “These measures demonstrate our determination to apply severe economic sanctions in response to Russia’s invasion of Ukraine. 

“We are announcing this action in rapid coordination with our US and European allies to move in lock step once more with our international partners, to demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict persists.”

Andrew Bailey, governor of the Bank of England, added: “The Bank of England continues to take any and all actions needed to support the government’s response to the Russian invasion of Ukraine. 

“We welcome the steps taken today by the UK government, in coordination with EU and US authorities, as an important and powerful demonstration of the UK’s commitment to the international rule of law.”