Russian banks admitted to regulator’s alternative to SWIFT for internal banking operations

From TASS -

“The Central Bank of Russia has admitted domestic banks to its alternative to the SWIFT international bank transaction system for internal operations, the regulator said in a statement on Friday.

Russian banks are connected to the system after signing corresponding agreements with the Central Bank of Russia.

“The new service will allow credit institutions to transmit SWIFT-format messages through the Bank of Russia in all the [Russian] regions without restrictions,” the regulator said in a statement.

The regulator’s new service has been established to ensure the continuous and secure transmission of financial messages inside the country, the statement said.

The Central Bank of Russia earlier reported it planned to complete creating a SWIFT alternative by May 2015.”

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Russia’s proposed interbank system threatens global economy

From The Sovereign Investor

“The international financial system is based on the U.S. dollar. The greenback is both the world’s “reserve currency” — the one everyone wants to hold when things go bad — and the principal means of exchange. The vast majority of transactions between companies, countries and people are denominated in dollars.

As my investment-oriented colleagues regularly discuss, the dollar’s dominance isn’t unchallenged. The Chinese yuan, in particular, has pretensions to become a second global currency, one so widely used that transactions unrelated to China could be conducted in yuan.

But there’s another challenge on the horizon: a new international interbank system that could create important opportunities — or chaos — for the world economy, depending on how the proverbial ball bounces.”

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The pros and cons of a SWIFT response

From The Economist 


“Blocking rogue states’ access to the world’s financial-messaging network is a potent measure, but it carries long-term risks.

In 1973 global finance saw a back-room revolution when a group of banks formed a co-operative to offer those moving money across borders a slick alternative to the clunky old telex. Today the electronic financial-messaging system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) transmits more than 5 billion bank-to-bank messages each year. In 2013 it oiled the transfer of trillions of dollars globally by the 10,500 banks, asset managers and firms that are its members. SWIFT does not initiate transfers, hold customers’ money, or clear or settle payments. Rather, it provides a template that helps international transfers flow smoothly and be tracked.

Without SWIFT, global trade and investment would be slower, costlier and less reliable. But the network’s very usefulness means it is increasingly being cast in a new role, as a tool of international sanctions. In 2012 it was obliged, under European law, to cut off access for Iranian banks that had been subjected to sanctions by the European Union. Now there are calls for Russian banks to be banned from SWIFT in response to Russia’s invasion of Ukraine.”

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Standard Chartered NY forced to suspend clearing following AML concerns

From Banking Technology

‘Standard Chartered Bank’s New York business has been fined $300 million and ordered to suspend US dollar clearing services to retail clients of the bank in Hong Kong, following an investigation by the New York State Department which determined its transaction monitoring system does not meet anti-money laundering requirements agreed in 2012.

In 2012, Standard Chartered was accused of breaching US sanctions against Iran by processing transactions to the country. Although a settlement resolved these issues at the time, Standard Chartered is now being accused of breaching that settlement, which required the bank to improve its AML processes.’

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