The Group of Seven (G7) countries, alongside the European Union, are exploring strategies to enhance pressure on banks that facilitate Russia’s evasion of international sanctions. This issue is set to be a key topic at the upcoming G7 summit in mid-June, according to insights from informed sources reported by Bloomberg and relayed by European Pravda.
Several G7 nations are considering targeted actions against financial institutions from third countries that use Russia’s System for Transfer of Financial Messages (SPFS), a counterpart to the SWIFT system, to circumvent trade restrictions. Presently, the SPFS system is utilized by over 150 foreign banks across approximately 20 countries including Belarus, Armenia, Kazakhstan, China, and Tajikistan. The usage of SPFS has tripled in 2023 compared to the previous year.
The European Commission has proposed sanctions against this system, aiming to finalize them before the G7 summit. However, several EU countries have expressed opposition to a complete ban on SPFS, fearing that such a move might adversely affect relations with third-party nations.
In the U.S., the Treasury Department has highlighted specific vulnerabilities in Russia’s financial system that sanctions aim to exploit. Alternative proposals under consideration include imposing sanctions on specific banks aiding Moscow, and tightening requirements for companies to vet their subsidiaries and supply chains.
Discussions, as reported by Bloomberg, will continue up to the G7 summit in Italy, where leaders plan to agree on a comprehensive set of measures to better enforce sanctions imposed on Russia for its war against Ukraine.
It's worth noting that at the end of last year, the U.S. introduced a sanction mechanism against foreign financial institutions found to be involved in supplying sanctioned military goods to Russia. This significantly impacted the financial flows between Russia and countries like Turkey, the United Arab Emirates, and Kazakhstan.
Additionally, the G7 hopes to reach a political agreement on how to utilize revenues from frozen Russian sovereign assets to assist Ukraine. This concerted effort reflects the G7’s ongoing commitment to uphold international law and support Ukraine amidst the ongoing conflict.
