Swift banking sanctions against Russia agreed

People protest in Germany to demand the introduction of Swift banking sanctions against Russia. EPA

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Western allies will adopt a new round of financial sanctions against Russia on Sunday including barring a number of Russian banks from the Swift interbank system.

Germany changed its position about imposing restrictions on Russia's access to Swift, allowing the breakthrough for agreement, on the same day it lifted a long-standing block on sending weapons to war zones.

The Swift move will affect Russian trade and make it harder for Russian companies to do business and will be adopted during a special meeting of EU foreign ministers on Sunday, chief EU diplomat Josep Borrell said on Twitter.

A US official said: “There's a process under way to finalise the list of banks that will be cut off from the Swift system. There are several [Russian] banks that Europe and the US have sanctioned and those will be the first ones considered.”

Japan will also join the effort. "Western nations have requested Japan participate. Japan will join this initiative," Prime Minister Fumio Kishida said on Sunday.

Ukrainian President Volodymyr Zelenskyy welcomed moves to disconnect Russia from “global financial civilisation” in a video message.

The US, Britain, European Commission and Canada moved on Saturday to block Russia's access to the Swift international payment system as part of another round of sanctions against Moscow.

The measures, which will include restrictions on the Russian central bank's international reserves, will be implemented in the coming days, the nations said in a joint statement.

"We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin," the statement said.

"As Russian forces unleash their assault on Kiev and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies," it added.

Announcing the deal, European Commission President Ursula von der Leyen said the measures would help “paralyse the assets of Russia’s central bank” so that its transactions would be frozen.

She said several commercial banks will be removed from Swift to “ensure that these banks are disconnected from the international financial system and harm their ability to operate globally”.

“Cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports,” she said.

They also announced a commitment to end so-called 'golden passports' where wealthy Russians connected to the Russian government can become citizens of our countries.

“Our diplomats fought around the clock to inspire all European countries to agree on a strong and fair decision to disconnect Russia from the international interbanking network. We also have this victory,” Mr Zelenskyy said.

“This is billions and billions of losses for Russia — a tangible price for this vile invasion of our country … Ukraine won the attention of the entire civilised world. And the practical result? Here it is — Swift … Disconnecting from global financial civilisation.”

UK Prime Minister Boris Johnson welcomed the impetus to exclude Russia from Swift.

Germany, which has the EU's biggest trade flows with Russia, had been reluctant to get on board with cutting off Russia from the world's main international payments network, saying it must first weigh the economic consequences of such a move.

Swift is a secure system that enables rapid cross-border payments and is the principal mechanism for financing international trade.

Berlin's change of heart came as Russian forces pounded Kiev and other cities with artillery and cruise missiles on day three of a campaign that has sent hundreds of thousands of Ukrainians fleeing west towards the EU, clogging major roads and railway lines.