Empire What is SWIFT & How It Affects Russia | Weekly Roundup
Mar 4, 2022
In this conversation, Simon Taylor, co-founder of 11FS and a fintech expert, unpacks the significance of SWIFT amid rising sanctions against Russia. He sheds light on the complexities of international transactions and the challenges banks face with compliance and ownership scrutiny. The discussion also dives into how technology might reshape financial systems, covering alternatives to SWIFT and the role of cryptocurrency in this evolving landscape. Taylor emphasizes the balance between regulation and privacy, making for a thought-provoking dialogue.
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SWIFT: A Messaging System
- SWIFT is a messaging system like email, not a payment system.
- Banks use SWIFT for international wires to communicate payment instructions.
Nostro-Vostro Accounts
- Money moves through nostro and vostro accounts, meaning "yours" and "mine" accounts held by corresponding banks.
- After messaging through SWIFT, banks adjust balances in these accounts to settle payments.
Banks: The Police of Money
- Banks act as the "police of money," performing KYC checks to prevent illicit activities like sanctions breaches.
- This involves verifying customer identities and checking against lists like OFAC.