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What is the Swift communication system?

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What is Swift system?

The Swift communication system is a secure message system. It is used by banks to notify other banks of the status of transactions between them.

What would be the effect of banning Russian banks from using the swift system?

To illustrate the importance of the Swift system to world banking, the removal of all Russian banks from the Swift system has been highlighted as the second of two main sanctions that can be made against Russia for the invasion of Ukraine. Removal of Russian banks from the Swift system would cause a total inability for Russian banks to transact internationally.

The reason many western European governments are against this is that if Russia was removed from the Swift system, then the Russian banks would be unable to repay debts called in by the western European banks. Energy products such as gas and oil also are often transacted via the Swift System. However not removing Russia from the swift system allows them to move money more freely.

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What is swift code? Swift communication system or (Society for Worldwide Interbank Financial Telecommunications) is utilised by over 11,000 members in over 200 countries, and allows financial institutions across the globe to send and receive financial messages in a standard and secure manner. Membership of this society is highly regulated, and only vetted members who have undergone intense due diligence are permitted to use this system.

The swift system ensures that banks can send authenticated swift messages to each other, and provides validation and verification checks on each of their communications. Each bank, depending on its size will have a number of swift operators for both outbound and inward bound messages.

It is important not to complicate professional conversations regarding financial transactions by referring to swift messages in any great detail as they are meant for inter-bank communication only.

What is Swift code MT 799 and MT 760?

Each swift message is dedicated to a particular financial transaction or communication and is preceded by the letters MT, (MT 100 for example is dedicated to cash transfers). This is a simple acronym and is short for Message Type. The authenticated swift messages most applicable to Bank Guarantees are the MT 799 and MT 760 as outlined below.

MT 799 is designated as a free flow message and is used in a number of communications, but is also utilised as a pre advice for Bank Guarantees, Standby Letters of Credit and Documentary Letters of Credit. The pre advise in relation to Bank Guarantees, is a message from The Issuing Bank to The Receiving Bank informing them that they are about to receive a Bank Guarantee in favour of one of their clients. The Receiving Bank will advise their client accordingly, and wait for the arrival of the Bank Guarantee.

MT 760 is a dedicated message type for transmitting on a bank to bank basis, Bank Guarantees, Standby Letters of Credit and Documentary Letters of Credit.

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