Russian bank defies sanctions via Iran

Russian bank defies sanctions via Iran
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In a move to defy Western sanctions, Russia and Iran bolster financial Cooperation.

Russia's largest financial institution, Sber, has initiated a new service allowing money transfers to Iran as both countries seek to mitigate the effects of Western sanctions.

As reported by the IRNA, Thursday's announcement by Sber disclosed that the service is open to individual clients and businesses. While it's a pioneering move by the bank, its demand remains to be determined. "The money transfer service to Iran is new to us. It's primarily crafted for tourists," revealed the bank's statement cited by RT. Transactions in Rubles will be directed to the Iranian Pasargad Bank, carrying a standard international transaction commission of 1%.

This strategic move emerged against intensified sanctions against Russia by the European Union and other Western nations in 2022. The sanctions aimed at curtailing Russia's invasion of Ukraine by limiting its access to the SWIFT financial transaction processing system.

SWIFT, a linchpin in global finance, offers a secure messaging protocol to facilitate cross-border money transfers and is utilized by numerous financial institutions across 200+ countries, Russia included.

In March 2022, a joint decision by the European Union, the United Kingdom, Canada, and the United States led to the removal of seven Russian banks, including Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, VEB, and VTB, from the SWIFT network. However, Sberbank, partially owned by Russian energy titan Gazprom, initially evaded this restriction. Gazprombank, too, remained unsanctioned. Yet, by the end of May, the EU delisted Sberbank from SWIFT as part of the 6th package of sanctions.

Nevertheless, the landscape of global finance saw an evolution in 2023 with the development of an alternative international messaging system, signifying shifting tides in international money transfers.