Monetary Blockade Of Russia Begins: JPMorgan Blocks Russian Money Transfer "Under Pretext" Of Sanctions

Tyler Durden's picture




 

While the flare up of Cold War 2.0 may seem like last week's news, overnight something very notable happened that so far virtually nobody appears to have paid attention to. According to Russian Kommersant, none other than the biggest US bank, JPMorgan, was reported to be "reviewing counterpart relations with all Russian lenders" citing unidentified people. The review is part of JPMorgan’s push for transparency in banking and not part of sanctions against Russia over Crimea. Perhaps this is true: Kommersant added that Sberbank and VTB were contacted in January and February while another unidentified bank recently received letter saying JPMorgan would cease correspondent accounts with them on April 1.

JPM cleaning up its act is certainly plausible: after all the last thing the bank that has paid out nearly $30 billion in legal charges, penalties and settlements in the past few years need right now is more legal charges due to laundering Russian billionaires' cash (coughHSBCcough) at a time when Russia, which has humiliated the US state department twice in under a year, is hardly perceived as a critical ally to the US. So one can see why JPM would be cautious in transacting with Russia financial entities.

And yet, while the headline sanctions so far have involved mostly freezing of Russian politician and oligarch assets in jurisdictions in where there were no such assets, it appears that JPM has not only escalated on its own but taken the Russian sanctions to an entirely new level: one which may quite promptly devolve into a complete monetary blockade of all of Russia.

Exhibit A:

Wait, did JPM just take a unilateral action, not mandated by the state department (because nowhere in the Russian sanction list does it say putting a freeze on Russian bank transfers), and refuse to process a simple money transfer? Why? And if indeed JPM is doing this, how long until all other US banks, most of which are just as allegedly criminal in dealing with offshore sources of illegal money, follow suit and leave Russia entirely in the world when it comes to USD-backed transactions.

Because what JPM may have just done is launch a preemptive strike which would have the equivalent culmination of a SWIFT blockade of Russia, the same way Iran was neutralized from the Petrodollar and was promptly forced to begin transacting in Rubles, Yuan and, of course, gold in exchange for goods and services either imported or exported.

One wonders: is JPM truly that intent in preserving its "pristine" reputation of not transacting with "evil Russians", that it will gladly light the fuse that takes away Russia's choice whether or not to depart the petrodollar voluntarily, and makes it a compulsory outcome, which incidentally will merely accelerate the formalization of the Eurasian axis of China, Russia and India.

At this point watch if any other US banks follow in JPM's footsteps, and block money transfers to or from Russia. Because then will things get truly interesting.

As for the Russian response, it is coming and will most likely be matched in severity.

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Tue, 04/01/2014 - 14:59 | 4614566 fiddler_on_the_roof
fiddler_on_the_roof's picture

Russia is going to get squeezed.

First USA wrestled Ukraine(other than crimea) from Russian orbit. Let us watch how Russian squeeze happens.

Tue, 04/01/2014 - 14:59 | 4614570 macholatte
macholatte's picture

 

Hope and Change Bitchez!

Tue, 04/01/2014 - 15:04 | 4614587 cossack55
cossack55's picture

Squeezing is one thing, the responding bitch slap is what worries me.

Tue, 04/01/2014 - 15:12 | 4614617 ParkAveFlasher
ParkAveFlasher's picture

So, what kind of product requires some sort of clearing in Kazakhstan?  Potassium?

Tue, 04/01/2014 - 15:14 | 4614623 Manthong
Manthong's picture

"JPMorgan’s push for transparency in banking"

.. this is starting to become just a tad annoying. 

Tue, 04/01/2014 - 15:17 | 4614632 kliguy38
kliguy38's picture

wait til' they try and load up Russia's gold......then the nukes will fly...foch the paper

Tue, 04/01/2014 - 15:26 | 4614665 knukles
knukles's picture

Just a reminder folks, that under international law, blocking a country from the international payments mechanism system is officially an act ot war

Tue, 04/01/2014 - 15:35 | 4614714 Keyser
Keyser's picture

And the right hand of god has spoken, and he shall smote thy enemies as if his own. The western banksters are writing their own epitaph. 

 

Tue, 04/01/2014 - 15:41 | 4614734 SoilMyselfRotten
SoilMyselfRotten's picture

Banks usually help start wars from behind the scenes, this is just silly

Tue, 04/01/2014 - 17:02 | 4615082 insanelysane
insanelysane's picture

Wasn't it noble JPM that still transferred Corzine's (er MFGlobal's) money to their own accounts even though no one at MF Global would sign that the origin of the money was legitimate?  Or am I mistaking noble JPM, savior of the world, financier of World War I and World War II, with some other banking syndicate???

Tue, 04/01/2014 - 18:18 | 4615280 jopa
jopa's picture

yes just after having ruined their very clients. indeed!

Wed, 04/02/2014 - 02:28 | 4616314 francis.sawyer001
francis.sawyer001's picture

INTERNATIONAL LAW - That baby was tossed out how many years ago?

When you look back on these times post 2007, you will all note that the 'rule of law', pretty much went with BUSH/CHENEY, the Law was terminated under Obama, and certified DEAD under HILLARY-2016.

The end of history is here.

MIGHT MAKES RIGHT, LAW is for WHINERS.

Law, is what you have POST-WAR, .. it can be argued by RUMSFELD/CHENEY that the USA has been in a State of War since 911.

Wed, 04/02/2014 - 06:00 | 4616476 Lore
Lore's picture

HILLARY-2016

~ Shiver ~

Wed, 04/02/2014 - 11:13 | 4617365 Unknown User
Unknown User's picture

Bush Jr. redefined the "rule of law" to mean whatever I say or do is the law.  Since no one challenged this, it is the law.

Tue, 04/01/2014 - 18:06 | 4615253 Jorgen
Jorgen's picture

I wonder where RF keeps her gold reserves. In Moscow or in NYC/London? If the latter, they are screwed...

Tue, 04/01/2014 - 21:28 | 4615790 Wahooo
Wahooo's picture

Russia should incinerate one European city a day until this shit stops.

Wed, 04/02/2014 - 02:22 | 4616305 francis.sawyer001
francis.sawyer001's picture

JPM "If you want your money, you can't have your money"

JPM has gone MT-GOX, who could have guessed?

Tue, 04/01/2014 - 15:16 | 4614628 ebworthen
ebworthen's picture

Or Palladium.

Tue, 04/01/2014 - 15:32 | 4614636 ParkAveFlasher
ParkAveFlasher's picture

I was thinking opium but palladium is a fine angle.  I'm not quite ready to change my war cry to "palladium, bitchez!" yet.

Tue, 04/01/2014 - 20:40 | 4615653 naughtius maximus
naughtius maximus's picture

Keep the change.

Tue, 04/01/2014 - 15:22 | 4614645 Matt_Master
Matt_Master's picture

Simple - Russia just needs to buy some phyiscal silver and crash that bitch

Tue, 04/01/2014 - 14:59 | 4614569 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Like the Russians don't already have alternate money transfer methods in place regardless of this latest tiff or not.

They maybe a lot of things but stupid so far hasn't been one of them if anyone has been paying attention. Chess vs checkers bitchez.

Tue, 04/01/2014 - 16:44 | 4614815 JuliaS
JuliaS's picture

Looks like the West can't wait to see Russia re-assemble itself into the former USSR by attacking its immediate neighbors. That's the kind of effect the the Great Mongol Empire once head on Slavic nations that nowdays make up Russia.

Indeed, nothing unites the rest of the world better than the hatred of us.

JPM boys better start arming their nailguns.

Tue, 04/01/2014 - 15:00 | 4614573 One And Only
One And Only's picture

Bitcoin transactions still fully functional!

Tue, 04/01/2014 - 15:50 | 4614605 DoChenRollingBearing
DoChenRollingBearing's picture

A week or so ago I sent a 0.05 BTC transaction from Peru to someone I do not even know!  All I needed was the access to the Internet, so no BTC client software needed, I did it via blockchain.info.  

"Easy-peasy!"

Tue, 04/01/2014 - 15:03 | 4614583 AlmostUncirculated
AlmostUncirculated's picture

Well here's the party line response: "We won't longer just accept dollars for our natural resources - pay us in anything you'd like!"

Tue, 04/01/2014 - 21:29 | 4615799 sethstorm
sethstorm's picture

They'll accept them and like it if they're properly handled.

Tue, 04/01/2014 - 15:06 | 4614592 1000yrdstare
1000yrdstare's picture

Is the next step, "Troops across borders"?  Where are we currently at with Zbigs chess game?

Tue, 04/01/2014 - 15:36 | 4614718 Keyser
Keyser's picture

It's a real shame that fucker is still drawing a breath. 

Tue, 04/01/2014 - 15:05 | 4614595 richsob
richsob's picture

Our firm stopped doing business with Russian companies and/or Russian nationals a year ago. We just couldn't justify the due diligence costs required to check everyone out. Nearly 100% of the time we discovered something that "wasn't quite right" with the parties asking us to do business with them so we just stopped trying altogether. I'm not saying JP Morgan has such a pure motive but I can say we know other financial firms that have also closed the gate on doing business in Russia over the past year.

Tue, 04/01/2014 - 15:10 | 4614612 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1, that's interesting yet not surprising.

Game on, I guess...

Tue, 04/01/2014 - 15:47 | 4614730 ParkAveFlasher
ParkAveFlasher's picture

A close family member has sold bananas from Ecuador into Russian buyers.  He was burned.  The pattern was to build a rapport on transactions that gradually increase in size, and then there's the BIG SHIPMENT and then ... no payment in return.

That goes to all you casual ZHers-against-ZHers-who-laud-Putin.  Some people know wtf they are talking about, even when they are joking or being ironic.  This will be a long cold hard slog through the phoenix'ing of our little experiment of America and you betta smoke 'em while you got 'em.

Tue, 04/01/2014 - 15:49 | 4614775 DoChenRollingBearing
DoChenRollingBearing's picture

ParkAve, that's a really common scam in import/export.  Build up a little trust, then cheat them!  

Excellent observation, I hope you've saved just one person here some money.

Tue, 04/01/2014 - 16:01 | 4614824 TahoeBilly2012
TahoeBilly2012's picture

Yea well there is thing called a Dunn Score, but duh.

Tue, 04/01/2014 - 17:02 | 4615085 ParkAveFlasher
ParkAveFlasher's picture

Right, and that score registers an omniscience factor of infinityinfinity with JD Power and Asso. and you can thus easily make judgements of all firms internationally and throughout the known universe at all points of all supply chains that ever existed.  This is why it is so damn easy to be well-off especially if you are not a multi-national firm or Noboa-like entity with 2,000 legal manifestations and a litigating army stationed in all major commercial centers.

Tue, 04/01/2014 - 16:42 | 4615001 Apeman
Apeman's picture

Was it Putin who didn't pay for your bananas?

Tue, 04/01/2014 - 17:04 | 4615062 ParkAveFlasher
ParkAveFlasher's picture

No, I don't believe Putin buys his own bananas.

Tue, 04/01/2014 - 17:30 | 4615155 Totentänzerlied
Totentänzerlied's picture

"The pattern was to build a rapport on transactions that gradually increase in size, and then there's the BIG SHIPMENT and then ... no payment in return."

Those are virtually the exact words in which the scam was described to me by a friend who exports fruit from Chile. Scammers work up to a full pallet (worth tens of thousands of dollars) and then just don't pay (of course now pallets are insured).

Tue, 04/01/2014 - 20:43 | 4615667 naughtius maximus
naughtius maximus's picture

Just because Putin is a rich corrrupt asshole doesn't mean he isn't surrounded by a lot of little corrupt assholes.

 

PS don't sell your banana's on Alibaba's website and 40,000 thieves :D

Tue, 04/01/2014 - 15:06 | 4614596 Kaiser Sousa
Kaiser Sousa's picture

dollar dump in 5, 4, 3, 2, .....

there r only 2 forms of real money... Physical Gold and Silver.

Tue, 04/01/2014 - 15:07 | 4614597 Impoverished Ps...
Impoverished Psychologist's picture

This is not Wikileaks, this is Russia...

 

If they think that they can freeze Russia out of the monetary system then the payback is going to be nasty.

 

This is a cheap shot, smacks of petulance and desperation.

Tue, 04/01/2014 - 15:24 | 4614658 unplugged
unplugged's picture

could be the Rothschild Regime's way out of their mess - they can blame the collapse on Russia

 

Tue, 04/01/2014 - 15:31 | 4614694 SMG
SMG's picture

I really hope your wrong.  I was just starting to accept false reality again.

Tue, 04/01/2014 - 15:37 | 4614721 unplugged
unplugged's picture

may I recommend gin & tonic

Wed, 04/02/2014 - 06:18 | 4616481 Lore
Lore's picture

Vodka embargo in 5..4..3..2..

Would they consider it at some point?  Regulated Intoxicants = Revenue + Sheeple Inebriation...

Tue, 04/01/2014 - 15:16 | 4614601 nelsonmandella
nelsonmandella's picture

Now how do you think Russia will react ? 

 

They will pump Billions into Silver and Gold and Bitcoin 

 

Physical Gold and silver for gas please germany 

 

and buy the way 20% discount if you pay in gold in advance 

Tue, 04/01/2014 - 16:00 | 4614821 JuliaS
JuliaS's picture

Don't say the "b-word". Fonies are drawn to it like flies to a fresh pile of shit.

Tue, 04/01/2014 - 16:25 | 4614918 NoClueSneaker
NoClueSneaker's picture

German gold is on the way - but there is some kind of traffic jam near the Liberty Street 33 .... :-P

Wurst & Bier as collateral will do the trick ....

Tue, 04/01/2014 - 15:07 | 4614602 ssp2s
ssp2s's picture

Likely authorized, or at least no objection received.

What they really ought to do is start suppressing gold prices, if that is possible.

Tue, 04/01/2014 - 15:07 | 4614604 buzzsaw99
buzzsaw99's picture

<-- Makes me want to deposit money with JPM

<-- God I hate those maggots at JPM

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