Risk of criminal solutions to Russia’s SWIFT exclusion

Western law enforcement under huge pressure to police new marketplaces

The decision of the EU, UK and US governments to disconnect a number of Russian banks from the SWIFT interbanking system will cause considerable disruption to the Russian economy. The key damage will impact energy companies supplying gas to Western purchasers whose access to payments in the form of dollars will be cut off. Buyers of Russian gas in Germany and Italy will no longer be able to transmit the payments from the West either. Other related measures will seek to cut the Central Bank of Russia off from their dollar based reserves, said to have been accumulated to a high of $640 billion.

Measures of this sort, but on a much smaller scale, were part of the West’s barage of ammunition against Iran. Cutting Russia from SWIFT is an altogether bigger exercise, given the Russian economy’s global position.

How will Russia respond to the new situation? One can be sure that this has been considered by Putin and his henchmen.

A number of scenarios have been posited.


We may well see a barter economy created where Russian gas is exchanged for imports into Russia.

Rupee accounts

Russian and Ukrainian trade with India is substantial– the former selling some $6 billion (worth of fertilisers and grain) to India, while the latter selling $3 billion (worth of rough diamonds and consumer goods) to Russia — and it has been suggested that Indian state banks would set up rupee accounts for Russian companies and all trade conducted outside the dollar zone.

This foreign currency trade may be mirrored in other countries with Russian trade interests.

China’s CIPS

One might also see a growth in the use of the Chinese/renmimbi economy equivalent to the SWIFT dollar interbank system. The Cross-Border Interbank Payment System (CIPS) is nascent and under state control. One question for international regulators is the extent to which the Chinese government will allow Russian companies to use this for their international payments.


The use of crypto accounts has been suggested and this might lead to a boom in crypto wallets which are placed outside the dollar zone to avoid US surveillance of the blockchain. Major crypto trading takes place in dollars but this would subject Russian trades to US scrutiny

Money laundering

Russian institutions and financiers are well trained in money laundering by layering cash payments (typically to avoid scrutiny from their own tax authorities) through offshore companies and real estate. The Russian state will have access to this technique and likely apply them using Western facilitators, even though they will have to pay high prices to such facilitators given the enormous danger at the moment of flouting sanctions law.

North Korea, Iran and Venezuela

Other sanctioned states may well come to the assistance of a beleaguered Russia to effect payments that otherwise will trigger mass bankruptcies in Russia. Connections with these states are likely between Kremlin officials and government figures abroad in foreign rogue states, whose own finances are likely to be precarious. Russian oil revenues would be attractive, even if those revenues are severely curailed by the new economicv sanctions.


Practices for carrying money on the person are long established and these are likely to thrive as Russian companies seek to make payments to importers. Likewise the use of Russian mules carrying hard currency from the West to Russia or third party trading partners is likely.


The worry for the international community is the extent to which payments will be made through criminal means to bypass controls as the disconnection from SWIFT starts to take effect. Everything from the Russian state, Russian oligarchs, major and smaller Russian companies may prefer to take risks on moving money through dubious means and countries rather than face certain collapse.

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