SWIFT, Russia and Nirav Modi: Global interbank payment system back in the news
India Today
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a Belgium-based messaging network that is widely used by banks across the world to send and receive money transfer orders or information.
In some relief for Russia, the United States and the European Union have opted not to cut Moscow off from the SWIFT global interbank payments system. At least for now. Following Russian President Vladimir Putin's decision to invade neighbouring Ukraine, calls have been made for Moscow to be removed from the interbank messaging system that is essentially used to transfer money.
While the US and its allies have responded to Russia's invasion of Ukraine with harsh economic sanctions, they have stopped short of taking any action linked to SWIFT. On Thursday, US President Joe Biden reiterated that European countries remain divided on whether or not to throw Russia off the SWIFT platform.
This is not the first time SWIFT is being talked about in popular discourse. SWIFT is the same system that was allegedly used by Indian fugitive diamond merchant Nirav Modi and his associates to defraud the Punjab National Bank (PNB) of Rs 12,967 crore. It is also the platform that was exploited by hackers in 2016 to loot close to $1 billion from the Bangladeshi central bank.
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a Belgium-based messaging network that is widely used by banks across the world to send and receive money transfer orders or information.The system is overseen by central banks in the United States, Japan and Europe.
The international payments system SWIFT is used by over 11,000 financial institutions in more than 200 countries.Banks that are connected to the SWIFT payments system get linked to all the banks on the platform and can use SWIFT messages to execute payments.The SWIFT messages are considered to be highly secured and allow banks to safely carry out high volumes of transactions in a short amount of time.
The SWIFT payments system was allegedly manipulated through fraudulent issuance of Letters of Undertaking (LoUs) in the name of companies linked to Nirav Modi to avail credit from overseas branches of Indian banks.
Europe and the US are raining down reprisals after President Vladimir Putin sent tanks, troops and fighter jets into Ukraine, adding to sanctions already pledged in response to his decision to recognise the independence of two breakaway Ukrainian provinces.Russia has dismissed the sanctions as a counter to the interests of those who imposed them. And they won't immediately dent an economy with $643 billion in currency reserves and booming oil and gas revenues.Bigger assaults could include ending Russian access to international payments system SWIFT and outright banning investment in Russia.
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