Hacker News Reader

Comment by treis | Hacker News Reader

>If a Russian oligarch wants to transfer money to a Swiss bank to buy a new boat, they'd need to convince that Swiss bank to be part of the new network as well.

I don't think it's about being actually able to send a message. It's having the transfer of dollars recognized. Say I send $50 million from my account at Sberbank to UBS and then try to transmit from UBS to my boat builder in the Netherlands. That won't work because UBS won't get $50 million added to their balance sheet because other banks don't recognize the Sberbank -> UBS transfer since it's not on SWIFT. To them, UBS will be trying to spend money it doesn't have and the transfers will get rejected.

In short, No SWIFT = No Dollar transfers outside the country.

View on HN

Absolutely wrong. SWIFT is just a financial messaging system (secure email for banks). Transfers of USD anywhere in the world ultimately require messages to/from US banks. US regulations require that those messages disclose the ultimate payer and payee of every transfer, and US banks must follow US regulations and block transfers that violate US sanctions. US banks are free to use whatever communications channels they choose, but SWIFT is used for 99% of international transfers today. SWIFT has nothing to do with balance sheets and banks recognizing fund transfers.

>. US banks are free to use whatever communications channels they choose

They're free to choose today because they all choose SWIFT. The second they choose a Russian backed system to evade sanctions is the second they lose that privilege.

Given that, I don't see how your post shows mine to be "absolutely wrong". If anything you're supporting my point that "No SWIFT" really means "No dollar transfers".

I disagree. US law and regulations are not tied to any particular messaging system. US banks are required to know their customers, and obey OFAC sanctions lists no matter how they send/receive payment instructions. If Russian banks are sanctioned, then US banks are not allowed to send dollars to or from them no matter how they choose to communicate.

The part of you post that I was primarily objecting to was that bit about this "UBS won't get $50 million added to their balance sheet because other banks don't recognize the Sberbank -> UBS transfer since it's not on SWIFT." That makes no sense. SWIFT is just messages sent between banks, other banks don't know what messages are sent between two other banks.

>I disagree

Disagree with what exactly?

Because, as far as I can tell, your contribution has been to nitpick a hand wavey explanation. Unless you have an objection to my fundamental point that No SWIFT means No Dollar transfers then I don't see what you're contributing here.

Reply on news.ycombinator.com