How offshore financial secrecy enables geopolitical sanctions evasion: A Swiss bank’s role in Venezuela-Iran trade networks

Indigenous and traditional financial systems in Venezuela and Iran, such as *cambios* in Venezuela or *sarbaz* in Iran, operate outside formal banking and have historically filled gaps left by state collapse or sanctions. These systems prioritize trust networks over institutional oversight, making them resilient but also susceptible to infiltration by actors like MBaer who exploit their opacity. Their exclusion from mainstream narratives reflects a bias toward Western financial frameworks, which pathologize non-state financial practices while ignoring their role in community survival.

The petrodollar system, established in 1974, incentivized sanctions evasion by forcing oil-exporting nations like Iran and Venezuela to seek alternative trade routes when denied access to dollar-denominated systems. Swiss banking secrecy dates to the 1930s, designed to protect Nazi gold and later repurposed to shield oligarchic wealth and geopolitical transactions. The 2008 financial crisis exposed how offshore jurisdictions enable systemic risk, yet reforms like FATF’s 'grey lists' have done little to dismantle the underlying architecture of secrecy.

In West Africa, *susu* savings groups and *tontines* in Cameroon demonstrate how informal financial networks operate as social safety nets, often more reliable than state institutions. Middle Eastern *hawala* systems, used for centuries, rely on honor-based reciprocity rather than legal contracts, making them resilient to state interference but vulnerable to criminal co-optation. These systems contrast sharply with the Western model of centralized, regulated banking, which assumes state capacity and legal enforcement—a mismatch that drives Global South actors toward informal alternatives.

Research from the IMF and World Bank shows that sanctions often exacerbate humanitarian crises by restricting access to essential goods, with studies linking U.S. sanctions on Venezuela to a 30% increase in child mortality. Offshore financial centers (OFCs) like Switzerland, Luxembourg, and the UAE account for 10-15% of global GDP, per Gabriel Zucman’s estimates, enabling tax evasion and illicit finance. The 'follow the money' approach to tracking illicit finance, pioneered by the UNODC, reveals how layered corporate structures obscure beneficial ownership, a tactic MBaer exploited.

Artistic works like Venezuelan *cuatro* folk music or Iranian *tasnif* poetry often encode critiques of economic hardship and sanctions, framing them as collective struggles rather than isolated crimes. In Latin American *testimonio* literature, financial collapse is depicted as a spiritual crisis, where hyperinflation erodes not just wealth but trust in institutions. Spiritual traditions in both Venezuela and Iran emphasize communal resilience (*jama’at* in Islam, *comunidad* in Latin America), framing economic survival as a moral duty rather than a legal transgression.

Scenario modeling by the Atlantic Council suggests that if sanctions regimes persist, trade networks will increasingly bypass formal banking, relying on cryptocurrencies and decentralized finance (DeFi) platforms, which are harder to regulate but also more transparent. A shift toward CBDCs (central bank digital currencies) could reduce reliance on offshore secrecy but risks enabling state surveillance of financial transactions. The MBaer case underscores the need for multilateral financial governance that addresses the root causes of sanctions evasion, such as currency instability and geopolitical exclusion.

Venezuelan migrants in Colombia and Peru often rely on informal remittance networks to send money home, where formal banking fees exceed 10% of transfers—highlighting how financial exclusion disproportionately affects the poor. Iranian women entrepreneurs, barred from formal banking, have turned to microfinance cooperatives, yet these remain underreported in Western media. The narrative’s focus on MBaer obscures the role of local fixers, brokers, and small businesses in these networks, who are often criminalized while operating within systems designed to exclude them.