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Tipsheet

Changing Its Tune, the White House Announces 'Selected' Russian Banks to Be Kicked Out of SWIFT

Yuri Kochetkov/Pool Photo via AP

Update:

Shortly after a joint statement from the United States and other leaders announced they were removing "select" Russian banks from SWIFT, an "Explainer" report from Reuters was published, referring to the move as a "financial nuclear weapon," quoting the French foreign minister.

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According to the report:

The United States, Britain, Europe and Canada committed on Saturday to removing some Russian banks from the SWIFT payments system, deploying what the French finance minister had earlier called a "financial nuclear weapon" because of the damage it would cause to Russia as well as its trading partners.

The latest round of sanctions came after the U.S. Treasury Department said it was targeting the "core infrastructure" of Russia's financial system, sanctioning two of its largest banks - state-backed Sberbank (SBER.MM) and VTB (VTBR.MM). Also on the sanctions list are Otkritie, Sovcombank and Novikombank and some senior executives at state-owned banks.

U.S. banks must sever their correspondent banking ties - which allow banks to make payments between one another and move money around the globe - with Russia's largest lender, Sberbank, within 30 days.

Officials in Washington also wielded the government's most powerful sanctioning tool, adding VTB, Otkritie, Novikombank and Sovcombank to the Specially Designated Nationals (SDN) list. The move effectively kicks the banks out of the U.S. financial system, bans their trade with Americans and freezes their U.S. assets.

The sanctions will also affect Belarussian banks. 

Original:

The White House has changed its tune quite a bit this week when it comes to the level the Biden administration is willing to go to sanction Russia's Vladimir Putin. On Saturday the White House released a "Joint Statement on Further Restrictive Economic Measures," with a key takeaway being "selected" Russian banks will be removed from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). 

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The joint statement comes from the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada, and the United States. SWIFT is the means by which banks communicate with other banks, and without such access, money cannot be easily accessed. 

"First, we commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally," the relevant measure on SWIFT reads.

Other measures are also included, such as making sure the sanctions have teeth. 

"Second, we commit to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions," another reads.

A third measure reads that the leaders are committed to limit the sale of citizenship through "so called golden passports" that let wealthy Russians connected to the government become citizens elsewhere, as a way to access finances elsewhere. 

Another measure lays out future plans for "this coming week" to do with additional sanctions for other Russian officials.

"Fourth, we commit to launching this coming week a transatlantic task force that will ensure the effective implementation of our financial sanctions by identifying and freezing the assets of sanctioned individuals and companies that exist within our jurisdictions," that measure read in part. 

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On Friday, White House Press Secretary Jen Psaki shared that the Biden administration was joining with others to directly sanction Putin as well as Foreign Minister Sergey Lavrov and members of the Russian security team. 

"As a part of this effort we are committed to employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers to identify and freeze the assets they hold in our jurisdictions," the measure continued. "We will also engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world." 

"Finally, we will step up or coordination against disinformation and other forms of hybrid warfare," the last measure reads.

Such action against Russian banks is considered a big step, and one of the most severe financial sanctions there is. Hedge-fund manager and investor Bill Ackerman laid out on Twitter how there could be long-term effects.

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During his Thursday address to the nation, President Joe Biden had stopped short of imposing the most serious sanctions, a talking point he caused confusion on when it comes to previous statements others in his administration has made. He also illustrated his failure to stand up to Putin. Biden's speech also contained reminders that the sanctions would take time before the effects were felt. He also added that "no one expected the sanctions to prevent anything from happening."

As Adam Shaw highlighted for Fox News, Biden made similar remarks in an interview published Saturday with Brian Tyler Cohen. 

"And there's no sanction that is immediate," he said during the interview. "It's not like you can sanction someone and say 'you're no longer going to be able to be the president of Russia.'"

He did still promote the sanctions, though. "But I think, I know these sanctions are the broadest sanctions in history, and economic sanctions and political sanctions," he said.

Ukrainian President Volodymyr Zelensky has been asking for western nations to impose sanctions for weeks, and has continued to make such calls. 

Secretary of State Antony Blinken was one of those who had made differing remarks. He, and others, had stressed the narrative, though, that they were not willing to impose sanctions on Putin just yet because they wanted them to have a "deterrent" effect and instead were focusing on "diplomacy and dialogue."

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Biden finally imposed sanctions on the Nord Stream 2 pipeline on Wednesday after Germany had already done so, in addition to having announced other sanctions.

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