Exclusion of Russian banks from SWIFT (2022)
Since March 12, 2022, Article 5h of Regulation 833/2014 has prohibited providing financial messaging services to a list of Russian banks, which forces SWIFT (Society for Worldwide Interbank Financial Telecommunication), a Belgian company, to disconnect them.
The exclusion of Russian banks from SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the European Union ban on providing financial messaging services to a list of Russian banks, which forces SWIFT to disconnect them. Council Regulation (EU) 2022/345, dated March 1, 2022 and published in the Official Journal on March 2, inserts Article 5h into Regulation 833/2014. Under it, providing specialized financial messaging services to the persons in Annex XIV, and to entities established in Russia that they own more than 50 percent, is prohibited. The annex has seven names: Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, VEB and VTB. The ban applies from March 12, 2022. The sixth package, Regulation 2022/879 of June 3, 2022, adds Sberbank, Credit Bank of Moscow and Rosselkhozbank from June 14. Gazprombank does not appear in Annex XIV. The text does not name SWIFT; it has no need to. The Society for Worldwide Interbank Financial Telecommunication is a cooperative company under Belgian law, based in La Hulpe, and therefore bound by EU law. A disconnected bank can still be reached by telex, through the Russian SPFS (System for Transfer of Financial Messages) network or through an unlisted correspondent; every message costs more and arrives later. For an insurer the effect is operational before it is legal: a premium owed by a Russian insured, a claim payment to a beneficiary banking with VTB, a letter of credit issued by Promsvyazbank no longer travel through the usual channel. The asset freeze that also hits most of these banks bars the payment itself in any case. The policy's premium payment clause and the value date become matters for litigation.
Textbook case: a Paris marine insurer owes 3,200,000 euros to a Cypriot shipowner for a machinery breakdown. The loss payee named in the contract banks with Sovcombank, in Annex XIV since March 12, 2022. The payment order cannot go out over SWIFT (Society for Worldwide Interbank Financial Telecommunication). The shipowner offers an account at a Limassol bank owned 30 percent by Sovcombank: below the 50 percent threshold of Article 5h, the message goes through. The asset freeze remains: if the Limassol bank were controlled by Sovcombank within the meaning of Regulation 269/2014, the 3,200,000 euros would be frozen on arrival.
SWIFT ban, SWIFT disconnection, de-SWIFTing, Article 5h, Article 5h of Regulation 833/2014, Annex XIV Regulation 833/2014, specialized financial messaging ban
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