Assad dispatched $250mn of Syria’s cash to Moscow

Bashar al-Assad’s central bank airlifted around $250mn in cash to Moscow in a two-year period when the then Syrian dictator was indebted to the Kremlin for military support and his relatives were secretly buying assets in Russia.

The Financial Times has uncovered records showing that Assad’s regime, while desperately short of foreign currency, flew banknotes weighing nearly two tonnes in $100 bills and €500 notes into Moscow’s Vnukovo airport to be deposited at sanctioned Russian banks between 2018 and 2019.

The unusual transfers from Damascus underscore how Russia, a crucial ally to Assad that lent him military support to prolong his regime, became one of the most important destinations for Syria’s cash as western sanctions pushed it out of the financial system.

Opposition figures and western governments have accused Assad’s regime of looting Syria’s wealth and turning to criminal activity to finance the war and its own enrichment. The shipments of cash to Russia coincided with Syria becoming dependent on the Kremlin’s military support, including from Wagner group mercenaries, and Assad’s extended family embarking on a buying spree of luxury properties in Moscow.

David Schenker, who was US Assistant Secretary of State for Near Eastern Affairs from 2019 to 2021, said the transfers were not surprising, given that the Assad regime regularly sent money out of the country for “a combination of securing their ill-gotten gains and Syria’s patrimony abroad”.

“The regime would have to bring their money abroad to a safe haven to be able to use it to procure the fine life… for the regime and its inner circle,” he said.

“Russia has been a haven to the Assad regime’s finances for years,” said Eyad Hamid, senior researcher at the Syrian Legal Development Programme, noting that Moscow became a “hub” for evading western sanctions imposed after Assad brutally put down an uprising in 2011.

Assad’s escape to Moscow as rebels closed in on Damascus has even enraged some former regime loyalists, who see it as proof of Assad’s overriding self-interest.

His shaky rule had been propped up by Iran and its proxy militant groups, which had intervened in 2012, and Russia, which brought its warplanes to bear down on what remained of the Syrian rebels and Islamist insurgents in 2015.

Syria’s relations with Moscow deepened dramatically as Russian military advisers bolstered Assad’s war effort and Russian companies became involved in Syria’s valuable phosphate supply chain. “The Syrian state could be paying the Russian state for a military intervention,” said Malik al-Abdeh, a London-based Syrian analyst.

The Assad regime moved bulk shipments of US and euro banknotes into Russia between March 2018 and September 2019. 

Russian trade records from Import Genius, an export data service, show that on May 13 2019, a plane carrying $10mn in $100 bills sent on behalf of Assad’s central bank landed in Moscow’s Vnukovo airport.

In February 2019 the central bank flew in around €20mn in €500 notes. In total there were 21 flights from March 2018 to September 2019 carrying a declared value of over $250mn.

There were no such cash transfers between Syria’s central bank and Russian banks before 2018, according to the records, which start in 2012.

A person familiar with Syrian central bank data said foreign reserves were “almost nothing” by 2018. But due to sanctions, the bank did have to make payments in cash, they added. It bought wheat from Russia and paid for money printing services and “defence” expenses, the person said.

They added that the central bank would pay according to “what was available in the vault”. “When a country is completely surrounded and sanctioned, they have only cash,” the person added.

Russian records show that regular exports from Russia to Syria — such as shipments of secure paper and new Syrian banknotes from the Russian state-owned printing company Goznak, and consignments of replacement Russian military components for Syria’s Ministry of Defence — took place in the years before and after the large amount of banknotes were flown to Moscow.

But there is no record of the two Russian lenders that received the banknotes from Damascus in 2018 and 2019 taking any other shipments of bulk cash from Syria or any other country over a ten-year period.

Even with Syria’s state coffers wrecked by war, Assad and his close associates over the past six years seized personal control of critical parts of the country’s devastated economy, said people with insight into the regime’s workings.

First lady Asma al-Assad, an ex-JP Morgan banker, built a powerful position influencing international aid flows and heading a secretive presidential economic council. Assad and his acolytes also generated revenues from international drug trafficking and fuel smuggling, according to the US.

Hamid, of the Syrian Legal Development Programme, said that “corruption under Assad was not a marginal affair or a side effect of the conflict. It was a way of government.”

Syrian cash transfers had previously elicited sanctions from Washington. The US Treasury in 2015 accused former Syrian central bank governor Adib Mayaleh and a central bank employee called Batoul Rida of facilitating bulk cash transfers for the regime to Russia, and managing fuel-related deals to raise foreign currency. Rida was also accused by the US of trying to procure the chemical ammonium nitrate from Russia, which is used in barrel bombs.

Records show the cash delivered to Moscow in 2018 and 2019 was delivered to Russian Financial Corporation Bank, or RFK, a Russian lender based in Moscow controlled by Rosoboronexport, the Russian state arms export company. 

The US Treasury sanctioned the bank this year for facilitating cash transfers, enabling “millions of dollars of illicit transactions, foreign currency transfers, and sanctions evasion schemes for the benefit of the Syrian government”.

In March 2018 records show Syria’s central bank also shipped $2mn to another Russian bank, TsMR Bank, which has also been sanctioned by the US. 

As Russian financial institutions were receiving cash from Syria, Assad’s other international backer, Iran, set up schemes to funnel hard currency to the beleaguered regime. Assad’s key money men took important positions in these companies, according to corporate records analysed by the FT. 

Yassar Ibrahim, Assad’s closest economic adviser, is a shareholder in a Lebanese company called Hokoul SAL Offshore, alongside his sister Rana, who has also been sanctioned by the US. 

Hokoul, according to the US Treasury, is directed by Iran’s Revolutionary Guard Corps-Quds Force and Lebanese militant group Hizbollah to move hundreds of millions of dollars “for the benefit of the brutal Assad regime”. Ibrahim’s role in the company has not previously been reported.

While the cordon of western sanctions forced the regime out of the dollar banking system, corporate records analysed by the FT show that key Assad lieutenants continued to move assets into Russia.

In 2019 the FT reported that Assad’s extended family had from 2013 bought at least 20 luxury apartments in Moscow using a complex series of companies and loan arrangements.

And as recently as May 2022 Iyad Makhlouf, Assad’s maternal cousin and a major in Syrian General Intelligence, which allegedly monitored, oppressed and murdered citizens, established a property company in Moscow co-owned by his twin brother Ihab called Zevelis City, Russian corporate records show. 

Iyad’s brother Rami Makhlouf was the regime’s most important businessman, at one point believed to control over half of Syria’s economy through a web of companies including mobile phone network SyriaTel. But after Rami fell out of favour with the regime in 2020, Syrians with insight into the regime say Iyad and Ihab remained close to Bashar and his wife Asma. 

Corporate filings show that Zevelis City was established by a female Russian employee of the US sanctioned Syrian-Russian banker Mudalal Khoury, who has been accused by the US of facilitating large movements of money from Syria to Russia on behalf of the Assad regime. 

Khoury appears to have played a pivotal role in embedding regime interests in Russia’s financial system, and in 2015 the US Treasury said Khoury “has had a long association with the Assad regime and represents regime business and financial interests in Russia”.

Schenker said that given the pressure Assad had faced from western governments, especially the US, for more than a decade, “Assad always knew that he would never be acceptable company in, say, Paris.

“He wasn’t going to be buying apartment buildings there, but he also knew that if this was going to end, it was going to end badly. So they had years to try and spirit away money, to set up systems that were going to be reliable safe havens.”