Assad dispatched $250mn of Syria’s liquid assets to Moscow

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

The monetary Times has uncovered records showing that Assad’s regime, while desperately short of foreign liquid assets, 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 friend to Assad that lent him military back to prolong his regime, became one of the most significant destinations for Syria’s liquid assets as western sanctions pushed it out of the monetary structure.

Opposition figures and western governments have accused Assad’s regime of looting Syria’s affluence and turning to criminal activity to finance the war and its own enrichment. The shipments of liquid assets to Russia coincided with Syria becoming dependent on the Kremlin’s military back, including from Wagner throng mercenaries, and Assad’s extended household 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 secure 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, elder researcher at the Syrian Legal advancement 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 view it as proof of Assad’s overriding self-gain.

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 attempt 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, display that on May 13 2019, a plane carrying $10mn in $100 bills sent on behalf of Assad’s central financial institution landed in Moscow’s Vnukovo airport.

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

There were no such liquid assets transfers between Syria’s central financial institution and Russian banks before 2018, according to the records, which commence in 2012.

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

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

Russian records display that regular exports from Russia to Syria — such as shipments of secure document and recent Syrian banknotes from the Russian state-owned printing business 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 liquid assets 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 history 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 advancement Programme, said that “corruption under Assad was not a marginal affair or a side result of the dispute. It was a way of government.”

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

Records display the liquid assets delivered to Moscow in 2018 and 2019 was delivered to Russian monetary Corporation financial institution, or RFK, a Russian lender based in Moscow controlled by Rosoboronexport, the Russian state arms export business. 

The US Treasury sanctioned the financial institution this year for facilitating liquid assets transfers, enabling “millions of dollars of illicit transactions, foreign liquid assets transfers, and sanctions evasion schemes for the advantage of the Syrian government”.

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

As Russian monetary institutions were receiving liquid assets from Syria, Assad’s other international backer, Iran, set up schemes to funnel challenging liquid assets to the beleaguered regime. Assad’s key money men took significant 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 business 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 throng Hizbollah to shift hundreds of millions of dollars “for the advantage of the brutal Assad regime”. Ibrahim’s role in the business has not previously been reported.

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

In 2019 the FT reported that Assad’s extended household had from 2013 bought at least 20 luxury apartments in Moscow using a complicated series of companies and financing 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 business in Moscow co-owned by his twin brother Ihab called Zevelis City, Russian corporate records display. 

Iyad’s brother Rami Makhlouf was the regime’s most significant 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 declare Iyad and Ihab remained close to Bashar and his wife Asma. 

Corporate filings display 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 monetary structure, and in 2015 the US Treasury said Khoury “has had a long association with the Assad regime and represents regime business and monetary 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 business in, declare, Paris.

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