EU Extends SWIFT Ban To Belarusian Banks

March 10, 2022
Belarusian financial institutions join Russia in being in the firing line over the Ukraine invasion, as the EU agrees on a further round of sanctions.

Belarusian financial institutions join Russia in being in the firing line over the Ukraine invasion, as the EU agrees on a further round of sanctions.

The EU’s 27-strong trading bloc has agreed on a new raft of sanctions for Russia and Belarus, following the former’s decision to invade Ukraine.

“Today's decision builds on the wide-ranging and unprecedented packages of measures the EU has been taking in response to Russia's acts of aggression on Ukraine's territorial integrity,” the European Commission said in a statement.

For Belarus, the measures introduce similar SWIFT prohibitions as those currently affecting Russia.

In particular, the measures restrict the provision of SWIFT services to Belagroprombank, Bank Dabrabyt and the Development Bank of the Republic of Belarus, as well as their Belarusian subsidiaries.

However, the country’s largest financial institution, Belarusbank, has not made it to the list.

“The impact of this measure will be limited for now, given that the rest of the banking system still has access to SWIFT, but we shouldn't forget about earlier sanctions from 2021 against Belarusian banks,” George Voloshin, director at Aperio Intelligence, told VIXIO.

In June 2021, the EU imposed debt and equity restrictions on Belarusbank, Belinvestbank and Belagroprombank. “On the banking side, EU sanctions would start to bite for real once financial institutions are added to the EU's blocking sanctions list, but this hasn't happened yet,” he said.

The new sanctions also prohibit transactions with the National Bank of the Republic of Belarus related to the management of reserves or assets, and the provision of public financing for trade with and investment in Belarus, and prohibit the listing and provision of services in relation to shares of Belarus state-owned entities on EU trading venues as of April 12.

The EU has sought to significantly limit the financial inflows from Belarus to the EU, doing this by prohibiting the acceptance of deposits exceeding €100,000 from Belarusian nationals or residents, the holding of accounts of Belarusian clients by the EU central securities depositories, as well as the selling of euro-denominated securities to Belarusian clients, and a prohibition on the provision of euro-denominated banknotes to the country has also been introduced.

It is difficult to say to what extent the latest sanctions are fair, said Voloshin. “In 2020, the people of Belarus protested en masse against the Lukashenko regime after a rigged presidential election.

“The protests were brutally suppressed. Now the same people are being punished for the erratic policies and political missteps of their president whom many within the country have long stopped seeing as a legitimate leader,” he argued.

For Russia, the EU has extended the exemption relating to the acceptance of deposits exceeding €100 in EU banks to Swiss and European Economic Area nationals.

As well as new restrictions on bank accounts and SWIFT, the EU has clarified its position on crypto-assets, which have been viewed by some as a possible way for Russian citizens to bypass the sanctions to which they are now subject.

The EU confirmed the common understanding that loans and credit can be provided by any means, including via crypto-assets.

The trading bloc also clarified the notion of “transferable securities”, so as to clearly include crypto-assets.

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