SWIFT disconnect: Why does it absolutely terrify the corrupt Russian elite?

Putin and Medvedev. Expert estimated Putin's net worth at $200 billion, (CNN)

Experts estimate Putin's net worth at $200 billion, gotten through plundering state resources (CNN) 

2015/02/16 • Op-ed, Russia

Article by: Andrey Shipilov

One bank official from Cyprus* explained to me why top Russian officials, such as Medvedev, Kostin, etc., responded so nervously and irrationally to reports of a possible disconnection of Russia from SWIFT.

The fact is that while the other Western sanctions affect the Russian economy as a whole, a disconnection from SWIFT would primarily affect them personally.**

Russia’s economy without SWIFT will continue to operate, albeit with difficulty. But they–personally–without SWIFT will not be able to control their personal anonymous assets in Western banks and will lose access to them.

At present, they control their accounts in Western banks anonymously through a chain of front firms, which are impossible to trace. But their operations are completely dependent on SWIFT for operation. All of current money-laundering and anonymization schemes are dependent on SWIFT. Other such operations simply do not exist at present, and new ones can not be developed in a month. Nor in six months, either. And it is not clear that they would be possible at all.

When disconnected from SWIFT, the [corrupt elite] will either have to give up control over their anonymous assets or assume a high risk of losing their anonymity.

* Cyprus is a major offshore tax heaven for Russian cash. For more information, read Quartz’s What Russian money sloshing back to Cyprus teaches us about tax havens.

**For more information about corruption amongst the top Russian elite, watch  CNN’s interview with Bill Browder, the CEO of Hermitage Capital Management, formerly Russia’s largest foreign investor, and a once supporter of President Putin. He describes the dynamics between power and wealth in Russia, claiming that during “the first eight or 10 years of Putin’s reign over Russia, it was about stealing as much money as he could. And some people, including myself, believe that he’s the richest man in the world, or one of the richest men in the world, with hundreds of billions of dollars of wealth that was stolen from Russia.”

Ban RUSSIA from the SWIFT payment system!

Ban RUSSIA from the SWIFT payment system!

Translated by: A. N.
Source: RuFabula.com

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  • Rods

    Just do it.

    Cameron to his credit has suggested this. With Merkel and Hollande it will depend upon how gas supplies and car and industrial goods and Mistral class carriers are paid for, to see their level of opposition.

  • Racquel

    Sounds like the perfect solution for greedy self-serving leaders who still want to do business with Russia. They’ll just have to wait a little longer for payment. The country can still function, be it via telegraph or wheel and buggy payment. Shift the impact from everyday Russian citizens to those who would have the most influence to remove al-Bag-Vladi, and halting the oligarchs’ dirty Western anonymous accounts would help facilitate that. It’s the least the Dirty Duo can do for their transgressions against Ukraine.

    Ukraine’s survival requires provision of lethal weapons “cease fire” or not.

  • Dr. Stanley Wesolowsky Ph.D.

    money laundering – What about the $100 Billion stolen by
    AL-BAG-YANUKOVYCH? And funding war in Eastern Ukraine.

    • On the Balcony

      C’mon, get real it’s not a $100 billion, just a few hundred million here and there…

  • W8post

    They are known in Russia as scammers; they also know how to use alternative money flows. They’re used [to] it…

  • Silencionomore

    Instead of talk, why don’t they just scrub russia out of it?. Chickens angela putin merkel and francois putin hollande impose nothing of worth and are actively engaged in helping russias extreme facist nazism take hold. Furthermore, what the heck is Poroshenko playing at?. How on earth can he not see how martial law in Ukraine would actually empower Ukraine millitarily in a big way if they do this right.

  • Bart Divanov

    A disconnect from SWIFT will cause a lot of losses for Western banks and businesses operated in Russia. It will also throw the economies into another depression – even bigger one than it was in 2008-2009.

    • W8post

      ” a lot of losses for Western banks ” : it’s the other way around > NOT to be connected to the Swift system means those Russian ‘business-men’ (read Mafia et al) cannot take their money OUT of their accounts. The banks will be happy that those kopecks stay a little longer with them. And *F• their economy!

    • W8post

      ” a lot of losses for Western banks ” : it’s the other way around > NOT to be connected to the Swift system means those Russian ‘business-men’ (read Mafia et al) cannot take their money OUT of their accounts. The banks will be happy that those kopecks stay a little longer with them. And *F• their economy!

      • Bart Divanov

        Russia was connected to SWIFT since the USSR. American and European banks already invested in Russia, that’s why it would be difficult for the US and EU to out the pressure. Financial lobby in Europe and the US will not allow it.

  • sandy miller

    Just do it. How much more blood needs to be spilled in Ukraine before these countries do the decent thing.

    • On the Balcony

      There is a direct link between what Ukraine is willing to do to help itself and the help that other countries are willing to give it. Ukraine appears to spend more time begging money that it does on collecting the money being lost through corruption and inefficiency. As that changes, so to will the aid from foreign countries.
      .

  • Mark Williams

    Go for it, then those crooks will be reduced to carrying their loot around in battered old suitcases – just like in the ‘good old days’ of the uSSr – which they so dearly crave for!!

  • luc’s views

    : money-laundering, Putin’s elite, Russian corruption, Russian elite, sanctions, = “SWIFT”!!

    GO FOR IT!

  • luc’s views

    NEW WESTERN LOGO
    BAN RUSSIA FROM S W I F T!

  • W8post

    “will create their own wire banking system” > when they are finished setting up a new system, the country will be, literally, in the gutter!

  • Honesty Counts

    BAN RUSSIA FROM SWIFT = EXCELLENT IDEA, lets do it !

  • Turtler

    “What a horrible idea.
    1st. The idea of punishing Russia for what
    is going on in Ukraine is absurd.”

    No, it’s not. Russia is the aggressor, and the one who started an embarrassing and needless conflict by first demanding its’ local stooge do something that was political poison *to his own support base*, and then panicking and invading for absolutely no good reason, using easily debunk-able pretexts.

    It is no more absurd than it was to sanction the Kwantung Army or the Third Reich.

    “Ukraine needs to blame its own
    oligarchs (including porshenko), and instead of giving them more power,
    needs to ask how they accumulated fortunes while the rest of the country
    has starved. Its corruption is its issue, not russia.”

    Yeah…… That would make sense if it weren’t for the fact that RUSSIA’S OLIGARCHS are not only far worse, they largely established the status quo for how that happened. As shown by their close alliance with the disgraced Yanukovych.

    Ignoring the Russian role in what happened is absurd.

    “2nd. Russia if further isolated would only be driven to replace
    western wall street monopolies with its own systems. Its just basic
    economics (supply and demand). If Germany stop selling cars to Russia,
    russia will get into the auto business. If they are kicked out of
    swift, they will create their own wire banking system, cutting out
    wallstreet.”

    They tried that already with the whole of the Communit Bloc behind them. THEY FAILED MISERABLY.

    The Russian auto industry during the Soviet years was a punchline on both sides of the Iron Curtain, and if they were capable of handling finances well the Russian government would not be dependent on SWIFT. At best they could get weak, unrecognized, and generally inferior kickstarted substitutes up. Just as likely, they will be utterly unable to get them up at all.

    Instead of coming up with reasons to hate on Russia, why dont you
    spend some time looking at ways of how you can improve Ukraine.”

    We do.

    But one of the key hallmarks of improvement- not the only one, but a maaajor one- is “PUT A STOP TO A WAR AND HOSTILE OCCUPATION.” Nations have improved even under the yoke or when at war, but that doesn’t mean it is an enviable situation.

    “All
    these sanctions and war do is make the rich richer, and poor hurt (and
    by Rich i include American corps who profit from conflicts”

    I love how you prattle on about that, but never, Ever confront the reality of Russia’s own oligarchs being part of that.

  • Turtler

    “According to who?”

    The Russian government’s own statistics, even before you factor out the traditional fudging of the n umbers.

    ” You know what country is in the Gutter? UKRAINE!
    Did not take
    sancations to do it either. Just 25+ years of oligarchs (both sides)
    buying, killing, and stealing up whatever was public goods.”

    Right. Nevermind the fact that it has also been subjugated under pro-Russian quasi-dictatorships for most of that period, who have been afraid to do fundamental basics like open up free trade with the EU for fear of retaliation.

    Ukraine would be VASTLY BETTER OFF if the Oligarchs actually DID buy up the Russian-owned oil lines and other infrastructure running through their territory. But hey, that would destroy your ignorant strawman. So you’re not going to mention that, are you?

    Of course not. Silly me.

    ” Ukraine is a republican wet dream! Where the powerful run everything!.”

    Key problem: Republican wet dreams do not involve being under Russian domination.

    Secondly, I love how you’re utterly ignoring Russia, where the case is even worse.

    “All the Maidan has done is take power from one party of PIGS and give it to antoher! Good job!”

    You’re an ignorant moron, aren’t you?

    ” The currency is worth 1/3 what it was last year. 1000s dead,”

    Yeah, well, guess what? HAVING A FAR LARGER POWER INVADE YOU AND FUND TERRORISM TENDS TO SCREW YOU OVER!!!

    Don’t blame the Oligarchs about this, because they were still in existence when Ukraine’s currency was worth 2/3rds more. So it’s obviously not them that caused that.

    “1/2 country wants to leave.”

    Not true. If that were the case, why have populations even in the East choose to emigrate *en Masse* rather than be under Putin’s puppet regimes?

    “Crimea is lost.”

    Not forever.

    • Frank

      You live in a bubble. Can you please show proof of Russians invading? If they did, the situation in the east would be resolved in 48 hours. Bottom line. Rebels have support from Russia, but support does not = invasion. Kiev started this war to reward the nazis who put them in power (Russophobes), and is losing badly. But it doesnt matter how many lives are lost, so far Kiev gets IMF bailouts they can line their pockets with.

      2 Years from now you will read about Poro, Yatz, and the rest of these clowns living in Miami, Ny or London with millions of stolen dollars. Its how Ukraine works, regardless of whos in charge and who the powerful are friendly with. The only way to fix it is the have a FULLY FEDERALIZED SYSTEM and punish corruption. Also a tax system which is more in line with what the communist party wanted would help stem a lot of this Money Lust and corruption.

      • Turtler

        “You live in a bubble.”

        Correct. I do, unfortunately.

        But you know what? I at least make an effort to know what’s going on outside of it. And as someone who has been to Russia in my life (something I regret immensely because they are a hostage-taking country), I am not exactly clueless.

        Unlike you. Who will blather on about evil Ukrainian oligarchs but completely ignore Russian ones. So who’s more crippled by the bubble?

        ” Can you please show proof of Russians invading?”

        Oh, I dunno. Let’s See. We have the repeated and publicly known incursions by Russian convoys into Ukrainian territory. We have the records by Russian informants that Russian army soldiers are being coerced into being sent to Ukraine. We have the identification of several of them that have been captured by the Ukrainian Army.

        And we have the fact that Putin has decided to host a very embarrassing show trial against the mother of one of the soldiers, who told the Ukrainian Embassy about Russian troop movements ona nd across the border. With the key problem for Putin being that if there really wasn’t an invasion, *THERE WOULD BE NO GROUNDS TO PERSECUTE.*

        That about sums it up.

        ” If they did, the situation in the east would be resolved in 48 hours.”

        Hardly. No Ukrainian War in history has been resolved withoin 48 hours. Even the most rapid fire and successful Russian invasions of the region have taken months to subjugate the place even if only counting the East.

        And furthermore, there are differing grades of invasion. Sending across millions of men with everything up to ICBMs is invasion. But so is sending across thousands of government soldiers disguised (poorly) as something else.

        “Rebels have support from Russia, but support does not = invasion.”

        Agreed.

        But “support’ that consists of sending thousands of people across the border is an invasion.

        ” Kiev started this war to reward the nazis who put them in power (Russophobes), ”

        Do you have Absolutely No Idea what is going on in the first place? Either in terms of who the players are, or- I dunno- THE BASIC TIMELINE?

        This war started before the Ukrainian government could do much of anything, when Putin seized the Crimea in a surprise attack. At which point he started trying to expand that success into the Eastern provinces and beyond.

        This is pretty basic on the timeline. I still have the Skype logs from when it happened.

        And on that note, pray tell me how the Ukrainian government could start a war *purely on its’ home soil*? It did not attack Russian soil (if it did, then things really would be far hotter than they are not). It has merely been fighting on territory that is Ukrainian by international recognition.

        And finally, Russophobia / = / Fascist (as the very Russophillic Dugin shows), and while there might be a handful of elements in Maidan that I would suspect of Fascist (Right Sector, etc al.) the vast majority do not even come close to fitting.

        Especially since my family has some acquaintance with the subject (having being round under Il Dunce), and Mussolini is the one who founded and defined Fascism. Or are we supposed to believe that the Alpha Fascist does not accurately define Fascism because you have a biased point to make?

        “and is fosing badly.”

        Not really. The territory “in rebellion” has been shrinking more or less steadily for a while now, in spite of increasing Russian military aid. Just look at any map of the conflict.

        I have zero doubt things would get ugly if Putin threw his hat into
        the ring openly, but under the current nature of the fighting it isn’t
        going very badly.

        ” But it doesnt matter how many lives are lost, so far Kiev gets IMF bailouts they can line their pockets with.”

        And in between the anti-capitalist rambling, how do you explain things like the seizure of Crimea by “Little Green Men?” How do you ignore the Russian oligarchs that helped inspire the Ukrainian ones, and who have largely ignited this conflict?

        “2 Years from now you will read about Poro, Yatz, and the rest of these
        clowns living in Miami, Ny or London with millions of stolen dollars.
        Its how Ukraine works, regardless of whos in charge and who the powerful
        are friendly with.”

        Perhaps, but that doesn’t change the main fact. That while you ignore the forest of evidence, Putin is killing people in an effort to create another bloody, racist satellite state. And he needs to be stopped.

        “The only way to fix it is the have a FULLY FEDERALIZED SYSTEM”

        Riiiiiight. Because rewarding devolution to the regions and giving the regional oligarchs more power is SUUUCH a great anti-corruption idea!

        Do you have any idea how Ukrainian politics or administration work at all?

        ” Also a tax system which is more in line with what the communist party
        wanted would help stem a lot of this Money Lust and corruption.”

        The Communist Party has not stemmed Money Lust and Corruption in the century plus it has existed, but it has stemmed economic development and even basic living necessities. Why in God’s Name do you think they’re such a great idea when they have such a record of failure?

      • Rudolf

        Frank,
        It seems to me you did not really dive into the matter.
        1. Russia and its green men invaded an independant state.
        2. France and Germany were seeking a diplomatic solution. Did not work so far, because you need two to dance.
        3. Putin was promising everything the west wanted to hear, but continued with his own plan, whatever that might be.
        4. The Donbass is turned into a new Transnistrie, a centre of money laundering and an international centre of weapons, drugs and women trade.
        5. Russia is being robbed by Putin and his croonies from all its resources and needs to have a foreign war or enemy to divert the publics discontent. After all, Russia is on place 55 when it comes to gross national product per inhabitant, despite the redundand oil, gas, coal, gold, etc resources.

        • W8post

          Tzar Puto reigns like Emperor Nero did. Do you remember FRANK, how it ended for Nero??

  • Lasting Joy

    Do it!

  • rschiel50

    Yep-to hell with ideology-when it comes to money Putin is just like any other man…I say let’s hit him where it REALLY hurts-right in the pocketbook!