And if the creditor bank happens to be in Russia, Iran, the DRPK, or any number of other hostile financial systems, the debtor bank will likely find things practically impossible to unwind regardless.

Sometimes they get lucky though and the government passes a law allowing them to seize equivalent assets a few decades down the road.

Making transfers to those countries is almost impossible from Western banks. It would require sophisticated multi-bank international transfers to do that, which take a long time and are fairly easy to stop.

They are already excluded from the financial system.

That proves the value of a well-regulated financial system.

Do you think money is transferred by shoving bank notes into the Ethernet cables?

When you transfer a dollar from your account to Putin's account in a Russian bank, in reality your bank transfers a dollar from their account within the FRS (Federal Reserve System) to Putin's bank's account within the FRS.

It can be more complicated with more intermediaries, but it can be traced and reverted.