SWIFT

Description

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Context:

The US and European Union (EU) have decided to cut off a number of Russian banks from the main international payment gateway, SWIFT.

What is SWIFT?

The SWIFT system stands for the Society for Worldwide Interbank Financial Telecommunication.
The SWIFT messaging network is a component of the global payments system.
Its principal function is to serve as the main messaging network through which international payments are initiated.
Established in 1973, it is a secure platform for financial institutions to exchange information about global monetary transactions such as money transfers.
SWIFT acts as a carrier of the "messages containing the payment instructions between financial institutions involved in a transaction."
Thus, SWIFT does not actually move money, but it operates as a middleman to verify information of transactions by providing secure financial messaging services to more than 11,000 banks in over 200 countries.
Based in Belgium, it is overseen by the central banks from eleven industrial countries: Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States, besides Belgium.

Note: SWIFT does not manage accounts on behalf of individuals or financial institutions. Also, it does not hold funds from third parties. It also does not perform clearing or settlement functions.