How international money transfers work (2016) [video]
media.ccc.de
media.ccc.de
The Bankers Almanac also helps explain how "legit fraud" takes place, ie: how money can move around sanctions. It seems clear that by cutting Russia off from SWIFT probably stifles unrelated 3rd parties from moving around other road-blocks. Could also be something helping to clear the path to CBDC's: by removing major exit points to "Freedom Dollars"/cash.
The very fact that one party can bully others to completely shut off parties from international banking is probably not what a lot of countries thought when they joined the system.
The Chinese' CIPS actually uses the SWIFT messaging system underneath, although I imagine China to be as neutral as the US/SWIFT when their own interests are at risk.
As much as I dislike Crypto what it is today, in a way the idea behind it is supposed to decentralize the trust system that is at the core of SWIFT. Otherwise you should consider that the only way you can have a truely neutral settlement party(i.e. a neutral SWIFT), is if it is run in a country that is strong enough to have a fully independent economy(already unlikely) and has enough military power to support itself. But then the latters interest in global power would probably directly interfere with the concept of neutrality.
> The very fact that one party can bully others to completely shut off parties from international banking is probably not what a lot of countries thought when they joined the system.
I don't know if that was necessarily the case. SWIFT was founded in the 1970s, during the cold war. I doubt any bank or country attaching to SWIFT expected to be able to use it to transfer money into the Soviet system. I can't find any easily available history of Russian connection to SWIFT, or whether that was before or after the fall of the USSR.
I would expect that any bank participating in SWIFT would expect that it is reliable and durable throughout the West, but that using it to connect with what used to be called the Second World would be best effort only, and could be cut off.
If we are talking ETH, it's possible to use zero knowledge proofs to send money and make it impossible to trace back to the source (see https://tornado.cash/). This also has some limitations, like you wouldn't be able to tornado 8 figures worth of ETH but certainly better than an OTC deal. It's also possible that the off-ramp exchanges could block any ETH that was sent through tornado. This gets hairy pretty quickly though, as the tornado ETH could easily be wash traded or mixed. Or it could be used legitimately, swapped for stablecoins, etc.
all of crypto ignores the real world.
If I buy a product from you, and I then transferred the payment to you through a US sanctioned entity, it would be your responsibility to not accept the payment. If you accept the payment, an FBI agent might come remind you of your duties.
In case of Bitcoin transactions, if such a law came into place, you might for example add to the contract that the payment in bitcoin needs to be made in non-tainted bitcoin.
Physical cash is like 2% of what people call money, which usually includes bank deposits.
When people STOP accepting bank deposits as money, as in the Euro financial crisis, that's when things get weird.
It doesn't get weird because bank X ran out of physical cash, it gets weird because at some point other banks/players stop accepting bank X deposits as money, and then what do you do?
Fiat currency is debt/credit.
> Banks cannot transfer their own book money.
I'm not sure what you mean by this - could you elaborate?
During periods of uncertainty and credit/trust dries up, this has been is an area where central banks have been partially stepping in by loosening credit access to spur continued trade and tradelines between financial institutions. This just keeps the credit line going, not settling the money itself. The parties always have the opportunity to try to settle it all.
- The video talks about a suspense account, basically locking your money prior to it being netted out against others and sent to the central bank. How often do these take place? How does that relate to my checking account having money as "available" as opposed to deposited? In general, which step is responsible for money transfer taking so long?
- What prevents me from going to two ATMs at exactly the same time and withdrawing my entire balance? Is there a single central location for instantaneous money transfers like ATMs?
I am a bit familiar with Interac in Canada, the EFTPOS (pin and chip retail) system here. Aside from the EFTPOS system, it also serves as a domestic interbank transfer service. When you withdraw money from an ATM, the ATM bank connects to your bank via the interbank Interac system, and submits your authorisation to transfer the funds out of your account into the ATM bank's receiving account and gives you the money. This is an atomic transaction done real time, so no double spending allowed. I believe it's conceptually quite similar for the European EFTPOS systems and Cirrus/Maestro in the US. Credit cards work a fair bit differently though.
And yes, the transfer from customer to merchant is in fact usually immediate. If someone buys something in my store, I can 10 seconds later use the debit card linked to the account to spend the funds. That's why reversing fraudulent debit card transactions can be a major pain with not much in the way of guarantee of restitution.
I'm thinking if there are multiple servers you could theoretically do it at the exact same time. Or if there are multiple servers but one database, is the database locked for your account when performing the request?
In the early days (1980s, 90s) this all tended to crash on Black Friday and Boxing Day, taking the whole thing down for entire banks and, a few times, nationwide. Been a good 20 years since that happened regularly though.
This is likely a combination a question of Money Transfer/Transmitter License & compliance, but this is not my area of expertise. A provider like Wise is licensed in the countries where it accepts customers. In this case, Wise is licensed in the US but not in Chile: https://wise.com/help/articles/2932693/how-is-wise-regulated...
As it's a costly and complicated endeavour, they must prioritise the markets they operate in and must have made the business decision not to be licensed in Chile as of now.
Luckily, Monito always try to find local companies filling the gap of big players, and Global66 is an interesting alternative from Chile: https://www.monito.com/send-money/chile/united-states/clp/us...
Moneygram is likely limited in accepting US residents with their US site for similar reasons.
https://www.fxempire.com/news/article/central-bank-of-russia...
If China joins it, that's going to be a problem.
Then I wonder if the spy agencies are going to be able to monitor those networks like they do SWIFT
Will it really be, though? China has their own system with CIPS, so if there's any joining, it will be Russia joining that. Then if Russia joins that, the West has a pretty strong political reason not to use it, then what you end up with is a controversial, lower-quality standard in competition with an already established standard.
Like sure, Firewire was sort of a thorn in USB's side, but look who won.
At the end, he says international cross-currency transfers are done through "intermediate" banks like jpmorgan that has an account from a bank in the country you want to send to.
So I'm unclear what the "swift ban" did and exactly how it affected russia? Do the international transfers still use the swift protocol?
Probably could have used something more internet related than plumbing.
Is this the case: nodes on SWIFT network need to update their code to block an endpoint like Russian banks?