G7·EU to Regulate Third-Country Banks Aiding Russia Sanctions Evasion

The Group of Seven (G7) and European Union (EU) countries are reportedly discussing measures to regulate third-country banks that have helped Russia evade financial sanctions.

[Image source=Yonhap News]

According to foreign media on the 1st (local time), the European Parliament has proposed imposing sanctions on third-country institutions using Russia's independent payment messaging system, SPFS (System for Transfer of Financial Messages), which was created to circumvent Western sanctions.

SPFS is an independent payment messaging system developed by the Central Bank of Russia after the West imposed various economic sanctions on Russia following its forced annexation of the Crimean Peninsula in 2014.

After Russia's invasion of Ukraine in 2022, as some Russian banks were excluded from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), Western sanctions against Russia intensified, leading to a significant increase in the use of SPFS.

Last year, the volume of SPFS usage nearly tripled compared to 2022, and currently, about 150 banks in over 20 countries including China, Belarus, Armenia, and Kazakhstan are using SPFS.

Using this system, Russia is believed to be importing goods necessary for weapons production from China, T?rkiye, the United Arab Emirates (UAE), and Central Asian countries, thereby evading Western sanctions.

The EU aims to agree on an additional package of sanctions against Russia, including regulations on SPFS banks, ahead of the upcoming G7 summit next month, according to foreign media.

However, some EU member states have expressed opposition, arguing that such sanctions could affect legitimate financial transactions and harm relations with third countries, the sources said.