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What is S.W.I.F.T. and why do we need it?
There were rumors that, as part of sanction against Russia in 2014, Russian banks may be disconnected from international money transfer system S.W.I.F.T.
The first thing that comes to mind is the sad story of Cyprian department of FBME, when it was simply disconnected from S.W.I.F.T. after money laundering scandal. In a moment is deprived the clients of the bank to transfer funds abroad, leaving to their disposal only limited checkbooks. What is this magical system and why are banks so much worse off without it?
Acronym S.W.I.F.T. stands for Society for Worldwide Interbank Financial Telecommunication. This organization allows international money transfers among its members - 10 500 financial institutions and large corporations in 215 countries around the world.
The idea of such an organization was born in 1973 - then the headquarters of S.W.I.F.T. were in Brussels and consisted of barely 40-square-meter office. Supported by 239 banks from 15 countries, founders of the system began working on a global network of financial data exchange, which would be a universal language for financial transactions around the world.
In 1976, the first operation centers were created; year later the first messages went out. In 1977, 3,400,000 messages between 518 clients from 22 clients were exchanged.
By today, this company has grown into a powerful worldwide system that offers its members wide range of products and services. Every participant of the system is provided with a unique code - so-called S.W.I.F.T. code, which features in every transaction. Banks of sender and recipient exchange information through the S.W.I.F.T. system, using their codes. Contemporary format of banking accounts in Europe - IBAN - includes information about bank's S.W.I.F.T. code by default.
Creation and worldwide success of such a system was an indicator of unification of global financial units around the world for provision of more efficient services, going out of the boundaries of local credit instruments. Disconnection of an institution from the system or termination of its membership would mean a huge step backward to isolation and limited opportunities.