Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 21, 2023 erstellt
Description:
PURPOSE – On March 2, 2022, the United States, Britain, Europe and Canada took significant and unprecedented action to respond to Russia’s further invasion of Ukraine by agreeing to disconnect seven Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’ global payments messaging system. This decision builds on the wide-ranging and unprecedented packages of measures the United States, Britain, Europe and Canada have implemented in response to Russia's acts of aggression on Ukraine's territorial integrity. These sanctions will have massive and severe consequences for Russia. Although the financial sanctions imposed on Russia, including the SWIFT ban are targeted at certain individuals and institutions as previously mentioned, the profound uncertainty about how these sanctions should be interpreted may create a pattern of risk aversion within the global financial sector. This paper analysed and examined the nature of possible unintended consequences of financial sanctions on Russia to identify how, and how much, the financial sanctions and their implementation – legitimate or otherwise - do in fact contribute to unintended and undesirable outcomes. DESIGN/METHODOLOGY/APPROACH – The analysis took the form of a desk study, which analyzed various documents and reports such as the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) advisories to the public on important issues related to Ukraine-/Russia-related Sanctions; United Kingdom’s Foreign, Commonwealth & Development Office advisories to the public on issues related to Ukraine-/Russia-related Sanctions; the Joint Money Laundering Steering Group (JMLSG) Current Guidance on the Prevention of money laundering/combating terrorist financing; Council of the European Union’s advisories to the public on important issues related to Ukraine-/Russia-related Sanctions; the Official Journal of the European Union, L 063, 2 March 2022: Document L:2022:063:TOC; Government of Canada’s advisories to the public on important issues related to Ukraine-/Russia-related Sanctions; the 2011 and 2013 FATF Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion; and the Financial Action Task Force (2012-2021), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation (the FATF Recommendations).FINDINGS – This paper determined that financial sanctions and their implementation – legitimate or otherwise - may create a pattern of risk aversion within the global financial sector when they are misinterpreted. Consequently, banks in the United States and Europe may become increasingly cautious in their handling of financial transactions from all Russian banks, seriously affecting the ability of Foreign Students in Russia to transact with other Russian Banks who have not been removed from SWIFT. Foreign students in Russia may encounter difficulties moving and storing money via the formal banking system, with delays in wire transfers which can last months, frequent requests for additional documents, blockages and occasionally the return of money. This paper concludes by discussing the measures that countries can adopt to mitigate the unintended consequences of the incorrect implementation of the financial sanctions. ORIGINALITY/VALUE – While many have written articles on the financial sanctions imposed against Russia in response to the unprovoked and unjustified invasion of Ukraine on 24 February 2022 and the illegal annexation of Ukraine's Donetsk, Luhansk, Zaporizhzhia and Kherson regions, none of those articles critically analyzed the potential negative impact of the incorrect implementation of financial sanctions by the global financial sector on Russia. This paper analysed and examined the nature of possible unintended consequences of financial sanctions on Russia to identify how, and how much, the financial sanctions and their implementation – legitimate or otherwise - do in fact contribute to unintended and undesirable outcomes. The paper will provide recommendations on how countries can mitigate the unintended consequences of the incorrect implementation of the financial sanctions. This is the only article to adopt this kind of approach