A SWIFT Kick to the Russian Financial System – The Cengage Blog

Quick Takeaways (Because Your Attention Is Also Sanctioned)

• SWIFT doesn’t move money. It moves the messages that tell banks how to move money. That distinction matters. ^[6][5]
• Russia wasn’t fully “deleted” from SWIFT. Selected banks were disconnected, while others stayed connected for practical reasons (especially energy payments early on). ^[3][4]
• Disconnection raises costs and friction. Payments can still happen via workarounds, but they’re slower, riskier, and more expensive. ^[6]
• SWIFT was only one tool. Freezing reserves, blocking banks, and limiting correspondent accounts hit the plumbing of global finance too. ^[1][5]
• Workarounds evolved. Alternative rails, intermediaries, netting systems, and even crypto-adjacent methods showed upnone are magic, but some are effective enough to matter. ^[11][12]

SWIFT 101: The World’s Most Important “Group Chat” for Banks

What SWIFT actually does

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. In plain English: it’s a secure, standardized
messaging system banks use to send payment instructions across borders. It’s how Bank A tells Bank B:
“Debit this account, credit that account, here’s the reference number, here are the compliance fields, and yes, we meant it.”
^[6]

SWIFT’s superpower is standardization. When everyone uses the same message formats and codes, payments become faster to verify,
easier to reconcile, and less prone to “Wait, what does this field mean in your country?” chaos.
^[6][5]

What SWIFT does not do

SWIFT doesn’t hold your money, lend your money, or personally pick up a suitcase of cash and jog it across a border like it’s training for a marathon.
It sends the instructions; the actual movement of funds happens through banks’ accounts and clearing systems.
This is why “banning SWIFT” isn’t the same thing as “turning off money.”
^[6]

Why the U.S. still matters to a Belgium-based network

SWIFT is incorporated under Belgian law, but it operates inside a world where the U.S. dollar is a dominant currency for cross-border activity.
Large chunks of international finance still touch U.S. banks, U.S. correspondent accounts, and U.S.-linked clearing pathways.
That gives U.S. policy enormous reacheven when the network itself isn’t American.
^[6][1]

So What Happened? The “Kick” Heard Round the Payment World

Selected Russian banks were disconnected

After Russia’s full-scale invasion of Ukraine in February 2022, the U.S. and allied partners backed measures that required SWIFT
to disconnect specific Russian banks from its messaging services. SWIFT publicly confirmed compliance with EU regulations and
described the disconnection of designated entities beginning in March 2022. ^[4][10]

Here’s the part many headlines glossed over: the approach wasn’t “all Russian banks, everywhere, forever.” It was targeted
and, at times, intentionally incomplete. A Congressional Research Service brief noted that some (but not all) Russian banks were removed,
in part to allow continued payments for certain energy imports at the time. ^[3]

Meanwhile, the U.S. hit the broader financial plumbing

In parallel, the U.S. expanded sanctions on major Russian financial institutions. The U.S. Treasury described measures aimed at the core
infrastructure of Russia’s financial system, including restrictions that cut off key banks from access to the U.S. financial system and dollar
processing routes. ^[1]

Think of it like this: SWIFT restrictions mess with the messaging. U.S. financial sanctions can mess with the ability to settle,
especially when dollars and correspondent accounts are involved. Put them together and cross-border finance starts feeling like running in wet cement.
^[1][5]

Sanctions kept evolving

Sanctions regimes aren’t “set it and forget it.” They adjust as targets adapt. For example, in late 2024 the U.S. Treasury announced
additional actions targeting Gazprombank and a wider set of internationally connected Russian bankspart of ongoing efforts to curb Russia’s
access to the international financial system. ^[2]

What a SWIFT Disconnection Does in Real Life (AKA: Welcome to Friction City)

1) Payment instructions get harder to sendand harder to trust

Without SWIFT, banks can still communicate via other channels (phone, encrypted messaging, bespoke systems), but it’s slower,
more manual, and increases operational risk. SWIFT’s standardized formats help confirm identity and reduce translation errors.
Lose the standardization, and you lose efficiency. ^[6]

2) Compliance risk skyrockets

Banks and firms don’t just worry about whether a payment can technically be sent. They worry about whether it will get flagged,
rejected, frozen, or investigated. In a sanctions-heavy environment, a transaction can fail because the counterparty is sanctioned,
the intermediary bank refuses the risk, or the paperwork isn’t clean enough to satisfy compliance teams.
(And compliance teams do not respond well to “trust me, bro.”)
^[5][1]

3) Trade finance gets messy

Global trade runs on documentation: invoices, letters of credit, shipping documents, insurance certificates, and payment confirmations.
When payment messaging and settlement pathways become uncertain, exporters and importers often demand prepayment, switch partners,
route through third countries, or simply stop dealing. That’s not just “finance drama”it’s real constraints on commerce.
^[5][6]

4) Everyday businesses feel it, not just “big banks”

If you’re a midsize manufacturer trying to pay a supplier, you don’t care about geopolitics in the abstractyou care about whether your invoice clears.
When routing becomes more complicated, costs rise: extra fees, worse exchange rates, longer settlement times, and higher “oops” risk.
Some transactions still happen, but the process becomes less predictable and more expensive.
^[3][6]

Why It Wasn’t a Total Blackout

The phrase “Russia was kicked out of SWIFT” is sticky because it’s dramatic and easy to repeat at parties.
But reality was more calibrated: targeted disconnections plus broader financial restrictions.
One reason: policymakers tried to increase pressure on Russia while managing spilloversespecially around energy payments and
global market stability in the early phase.
^[3][10]

Also, even if you disconnected every bank tomorrow, the world would immediately begin duct-taping alternatives together.
That doesn’t mean the sanctions failit means sanctions are about increasing costs and limiting options, not flipping a single “off” switch.
^[6]

Workarounds: How Payments Find a Way (Even When They Shouldn’t)

Alternative messaging and non-SWIFT channels

When SWIFT access is restricted, banks can revert to less standardized communication methods. The result is higher friction and risk,
but not total paralysis. Analysts have long noted that alternatives existjust with meaningful tradeoffs in speed, security, and scalability.
^[6]

Leaning into China trade channels and netting arrangements

As sanctions pressure and compliance risk grew, trade finance between Russia and China faced new bottlenecks.
Reporting in 2025 described a netting-style arrangement (“China Track”) used by Russian banks and intermediaries to reduce visibility
and cut transaction costs for certain Russia–China trade flows. That kind of system doesn’t replace global finance; it re-routes slices of it.
^[11]

Crypto-adjacent pathways (stablecoins, tokens, and the cat-and-mouse game)

Sanctions also pushed experimentation at the edges: stablecoins, tokenized settlement layers, and other tools that can move value without
traditional banking rails. In 2025, reporting described a ruble-linked stablecoin being used at scaleframed as one more workaround in a wider
adaptation ecosystem. ^[12]

Important caveat: “crypto can bypass sanctions” is the kind of sentence that sells clicks, not accuracy.
Crypto can help with certain transactions, but scaling it for large, regulated, cross-border trade raises visibility, liquidity, and enforcement issues.
The workaround landscape is realbut it’s not a cheat code with infinite lives.

The bigger strategic risk: alternatives slowly get better

One long-term effect of heavy sanctions usage is that targeted countries (and countries worried they could be targeted someday) invest in substitutes.
A CSIS analysis argued that China is building pieces of an alternative ecosystemmessaging, clearing, and renminbi-based settlementthough with
real limits “for the moment.” Translation: not ready to dethrone the existing system, but improving over time.
^[6]

SWIFT Was the Headline, but the Dollar System Was the Muscle

If SWIFT is the global finance “instruction manual,” the U.S. dollar system is the warehouse where many of the parts live.
You can still try to build the thing without the warehouse, but you’ll spend a lot more time hunting for partsand you may discover
some parts are just… not for sale.

The U.S. Treasury’s 2022 actions emphasized restricting access to the U.S. financial system and dollar transactions for major Russian banks,
including correspondent and payable-through account restrictions (the channels foreign banks use to transact through U.S. banks).
This matters because even non-U.S. entities often need a dollar pathway for trade, investment, or hedging.
^[1]

A New York Fed staff report on financial sanctions explains how access to payment infrastructures can be restricted and why such measures can
disrupt a wide range of cross-border activitynot just “finance,” but tourism, remittances, and trade financing.
^[5]

Bottom line: the “SWIFT kick” is best understood as part of a broader sanctions package that tried to constrain messaging,
settlement, and the institutional infrastructure behind global payments.
^[1][5]

Did It Work? Depends on What You Mean by “Work”

If “work” means “impose real costs,” yes

A Peterson Institute analysis in early 2022 described Russia “reeling” from the initial wave of financial sanctions and emphasized that the measures
were broad and fast-moving. Early-phase shocks included market volatility, increased frictions, and rapid adjustments in financial channels.
^[7]

If “work” means “immediately stop the war,” sanctions rarely do that alone

Over time, sanctions become an endurance contest: enforcement versus evasion, pressure versus adaptation.
A Brookings analysis in late 2025 argued that sanctions have changed the course of conflict by weakening Russia economically and complicating its
ability to sustain aggression, while cautioning against exaggerating sanctions as a single decisive tool.
^[8]

If “work” means “force a permanent financial collapse,” that’s not how modern economies behave

Countries adapt. Firms reroute. Banks find intermediaries. New payment habits form. Some pain fades into the background; some becomes structural.
A CFR analysis in 2025 discussed the breadth of U.S. sanctions and the evolving debate over their effectiveness and future direction.
^[9]

FAQ: The Questions People Ask After Reading One Headline and Panicking

Is SWIFT a bank?

Nope. It’s a secure messaging cooperative used by banks. It doesn’t hold deposits or lend money. ^[6]

Did Russia get fully removed from SWIFT?

Not completely. Selected banks were disconnected, and the scope evolved over time. Some banks stayed connected for practical reasons at points,
including energy-payment considerations noted by CRS. ^[3][4]

Can sanctions be bypassed?

Some transactions can be re-routed, disguised, or shifted to alternative railsbut the tradeoffs are real: higher costs, higher risk, more friction,
and more enforcement exposure. Workarounds are evidence of adaptation, not evidence of irrelevance. ^[6][11][12]

Why does the U.S. have so much leverage?

Because of the dollar’s central role, the reach of U.S. correspondent banking, and how global clearing pathways often touch U.S. infrastructure.
That leverage is amplified by coordination with allies. ^[1][6]

Conclusion: The Kick Was RealBut It Wasn’t a One-Move Knockout

The SWIFT restrictions made a complicated system more complicatedon purpose. By cutting selected banks off from standardized financial messaging,
the coalition behind the sanctions increased friction in cross-border payments. Pair that with restrictions on dollar access, correspondent accounts,
and major bank sanctions, and you get a powerful squeeze on the routines that keep global commerce humming.
^[1][3][4][5]

But the deeper lesson is bigger than any one acronym: modern financial pressure works by constraining networks. Networks have redundancies,
workarounds, and “friends of friends.” So outcomes land on a spectrum:
more expensive, more risky, less efficient, and harder to scale.
That’s not a movie-ending explosion. It’s an ongoing tax on capability.

If you’re studying international business, finance, or political economy, SWIFT is a perfect case study because it’s deceptively simple at first glance
and fascinatingly complex once you follow the wires. The headline might be a “kick,” but the real story is the plumbing.

Hands-On Experiences: Living Through a “SWIFT Shock” (Without Needing a Bank Charter)

You asked for experiences, so let’s do this the Cengage way: practical, memorable, and just nerdy enough to be useful.
Below are several hands-on “experiences” that educators, analysts, and business teams commonly use to understand what a SWIFT disruption
feels like in the real worldminus the international incident.

Experience #1: The 30-Minute Payment Relay (a classroom favorite)

Split into teams: Importer, Exporter, Importer’s Bank, Exporter’s Bank</strong remember (Compliance, and Intermediary Bank.
Give the Importer an invoice in euros, but make their available cash in dollars. The mission: pay the Exporter correctly, with clean documentation,
and settle within “two business days” (in classroom time: 10 minutes).

Round one uses “SWIFT mode”: you hand teams a standardized message template (fields for beneficiary, IBAN, purpose, sanctions screening results,
and reference numbers). Most groups complete the transfer quickly. Then you introduce the twist: “Your bank is disconnected from SWIFT.”
Suddenly, teams must communicate payment instructions via unstructured channelsphone calls, handwritten notes, or chat messages with missing fields.

What happens next is always the same:

• Errors multiply. Wrong identifiers, missing purpose codes, mismatched beneficiary names.
• Compliance becomes the bottleneck. Screening takes longer because information arrives incomplete.
• Trust evaporates. The Exporter wants prepayment or refuses shipment.

The key lesson isn’t “payments stop.” It’s that friction becomes the product, and everyone pays for itvia time, fees, and risk.

Experience #2: The “Good Bank / Risky Bank” Vendor Dilemma

Run a scenario where a U.S. company sources components from a supplier that’s not sanctioned, but the supplier’s bank has a complicated profile:
maybe it’s still connected to standard messaging, but it routes through an intermediary in a high-risk jurisdiction.
Your procurement team just wants the part delivered. Your finance team wants predictable payments. Your compliance team wants to sleep at night.

Ask the group to choose one of three options:

1. Pay normally (fast, cheap) but accept a higher probability the payment gets flagged or delayed.
2. Route through a safer intermediary (slower, more expensive) but reduce compliance risk.
3. Change suppliers (strategic shift) but take a short-term production hit.

People quickly realize that “financial sanctions” aren’t just geopoliticsthey’re operational constraints that rewrite business tradeoffs.

Experience #3: The Netting Game (why “alternative rails” can be attractive)

Introduce a simplified netting system: instead of each company paying each counterparty directly, a clearing agent nets obligations and settles periodically.
In a classroom simulation, this feels efficientlower fees, fewer cross-border hits, fewer transactions to screen.
It also demonstrates why netting arrangements can become appealing when standard channels become costly or risky.
But then add realism: limited counterparties, limited geography, and periodic settlement risk.
You learn fast why these systems can move meaningful volume in a niche while still failing to replace the global ecosystem.

Experience #4: The “Sanctions Cat-and-Mouse” Timeline Drill

Finally, do a timeline exercise: show how sanctions evolve. In 2022, the initial focus is immediate shock and isolation; later, enforcement tightens and
targets shift as workarounds appear. Students and professionals alike notice a pattern: once an evasion pathway becomes common knowledge, it becomes a
candidate for enforcement attention, which pushes activity into the next workaround. The outcome is not static complianceit’s moving-target compliance.

The payoff from these experiences is a durable intuition: the SWIFT “kick” is less like flipping a switch and more like throwing sand into a machine.
The machine still runs, but it runs hotter, slower, and breaks more often. And if you’re trying to run a business on top of that machine,
you start redesigning your workflowssometimes in ways policymakers remember to anticipate, and sometimes in ways they definitely don’t.