![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/Tom-Zschach.jpg\")
Tom Zschach says SWIFT wants to ensure the world stays connected in cross-border payments. Photo: Asia Times \/ Jeff Pao<\/p>\nThe Society for Worldwide Interbank Financial Telecommunications (SWIFT), the Western-led global financial transfer system, has implemented various control measures for banks to identify those who use cryptocurrencies to assist Russia and China bypass Western sanctions, including those imposed over the Ukraine war, according to a SWIFT executive.<\/p>\n
\u201cThere is a number of different controls that are built into the system, and things that financial institutions and banks can use to manage and permit the traffic that happens over the SWIFT network,\u201d SWIFT\u2019s Chief Innovation Officer Tom Zschach told Asia Times in the Q&A session at a London cryptocurrency event on May 6.<\/p>\n
\u201cIt\u2019s a pretty mature infrastructure that we have in place. It\u2019s all driven by our banks, around the agreements they have in place to transact with any of the counterparties around the world,\u201d he said. \u201cIt\u2019s pretty robust. It\u2019s been in place for quite some time, and it helps to support things, even in the future, with some of the ideas we see rolling out around automatic compliance.\u201d<\/p>\n
Currently, SWIFT offers the Customer Security Programme (CSP) and the Customer Security Controls Framework (CSCF) to help financial institutions monitor suspicious or sanctions-dodging transactions.<\/p>\n
Zschach\u2019s said his primary responsibility is to drive innovation across SWIFT\u00a0and collaborate with the SWIFT community and partners to prevent the fragmentation of international payment markets amid the rise of cryptocurrencies.<\/p>\n
However, at the Digital Assets Summit organized by the Financial Times on May 6, media members were more interested in SWIFT\u2019s efforts to prevent Russia and China from evading sanctions and moving to a different payment system.<\/p>\n
Zschach did not name Russia and China specifically but stressed SWIFT\u2019s increasing role in ensuring the world stays connected in today\u2019s geopolitical situation.<\/p>\n
\u201cThe geopolitics impacts many different areas, including payments,\u201d he said. \u201cWe could build \u2018digital islands\u2019 and start to create different networks that aren\u2019t connected. But nobody wins from the fragmentation.\u201d<\/p>\n
\u201cIn the US, there\u2019s a pullback from globalization\u2026. Now, SWIFT plays an even more important role in ensuring the world stays connected and that we don\u2019t lose the trust and the ability to scale.\u201d<\/p>\n
Tom Zschach says SWIFT wants to ensure the world stays connected in cross-border payments. Photo: Asia Times \/ Jeff Pao<\/p>\n
His comments came after Reuters reported<\/a> in March that Russia has used cryptocurrencies such as bitcoin, ether and stablecoins such as Tether (USDT) to effectively bypass Western sanctions in its estimated US$192 billion oil trade with China and India.<\/p>\n Stablecoins are digital assets that use blockchain technology to peg to the US dollar. They allow \u201cT+0\u201d or\u00a0same-day settlement\u00a0for cross-border transactions, while a traditional wire transfer can take up to five working days.<\/p>\n Traditional cryptocurrencies such as Bitcoin have a limited supply and high volatility as they are made through time-consuming and heavy electricity-using \u201cmining\u201d activities. Stablecoins have an unlimited supply as long as they are backed by dollars.<\/p>\n Crypto trading, which does not involve the SWIFT system, creates an environment for money laundering, cybercrime, and sanctions evasions. Crypto exchanges and related banks are responsible for \u201cknowing your customer\u201d (KYC).<\/p>\n The US Treasury\u2019s Office of Foreign Assets Control (OFAC) often sanctions<\/a> companies and bourses in Russia, North Korea and Venezuela for suspicious crypto activities.<\/p>\n Sanctions against Russia<\/p>\n After Russia invaded Ukraine in February 2022, the US, European Union (EU), United Kingdom (UK) and Canada agreed to punitively purge seven Russian banks from the SWIFT system.<\/p>\n China had once settled trade transactions with Russia in renminbi but the US deterred that workaround with secondary sanctions.<\/p>\n Russia and China then settled their transactions in more complex, harder-to-decipher ways. For example, Russians bought<\/a> Chinese electronic parts and paid in gold, precious metals or gemstones, which were sold to the Middle East for US dollars. Hong Kong is both a logistics and financial hub for such operations. \u00a0<\/p>\n Last year, the US Treasury curbed<\/a> these activities by sanctioning a group of Hong Kong and Chinese companies and threatened to sanction some small Chinese banks.\u00a0<\/p>\n The Wall Street Journal reported<\/a> in April last year that intermediaries and smugglers have turned to using Tether to buy weapons and equipment for Russia\u2019s defense industry. Some quoted in the article estimated this \u201cshadow trade\u201d at $10 billion a month.<\/p>\n Last September, Russia reportedly opened<\/a> two crypto exchanges in Moscow and St Petersburg to support external trade. <\/p>\n \u201cCould crypto eventually provide a \u2018workaround\u2019 to sanctions enforcement and prohibitions on terrorist financing?\u201d researchers at the Washington-based Brookings Institution weighed<\/a> in a report last year. \u201cThe fundraising techniques of those seeking to evade sanctions and prohibitions could easily become more sophisticated.\u201d<\/p>\n The report said stablecoins could also become a way for terrorists to launder funds.<\/p>\n Crypto bourses in Asia<\/p>\n On January 23, US President Donald Trump signed an\u00a0executive order<\/a> encouraging the growth and use of digital assets, blockchain technology and related technologies across all sectors of the US economy.<\/p>\n \t\t Steve Lee, co-founder of Neoclassic Capital, said at the Digital Assets Summit that many Asian countries are quickly building new crypto exchanges.<\/p>\n \u201cJapan has been very progressive regarding crypto regulations since 2017. They are now aiming to lower the tax rate on crypto gains from 55% to 20%,\u201d Lee said. \u201cIn South Korea, institutions might be able to start trading cryptos by the end of this year.\u201d<\/p>\n \u201cSingapore is easing its regulations to attract global crypto players, such as Robinhood Crypto (a US-based bitcoin trading platform),\u201d he added.\u00a0<\/p>\n It remains unclear whether these Asian crypto exchanges will become new platforms for Russian and Chinese companies to circumvent US sanctions.<\/p>\n In a crypto roadmap<\/a> unveiled last November, the UK\u2019s Financial Conduct Authority outlined its policy publications for regulating stablecoins, crypto firms, and exchanges. It will finalize the rules in 2026.\u00a0<\/p>\n Multinational law firm Pinsent Masons said<\/a> in March that crypto companies have begun self-reporting suspected breaches of sanctions against Russia to the UK government. Three out of 50 self-reports originated from crypto firms, while others were from financial institutions.<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/Steve-Lee.jpg\")
Steve Lee, co-founder of Neoclassic Capital, says Asian countries are building their crypto exchanges. Photo: Asia Times, Jeff Pao<\/p>\n