The SWIFT ban may have hit Russian finances but the crew of seized superyachts still need to be paid, experts say

  • Superyachts belonging to Russian oligarchs have been seized amid Western countries’ sanctions.
  • Russian companies’ finances have been hit but crews still need to be paid, experts told Insider.
  • Staff will leave the ship if there is any chance they won’t receive their wage, a lawyer said.

Russian billionaires have been the target of Western countries’ sanctions amid Russia’s war in Ukraine but their yacht crews could also inadvertently suffer.

As the detention of their superyachts and properties show, Russian oligarchs are on world leaders’ radar due to their ties with Russia’s President Vladimir Putin. Questions have been raised as to whether sanctions on Russia’s financial system could also affect oligarchs’ ability to pay their staff.

One of the earliest sanctions imposed on Russia was expulsion from the SWIFT payments system. The action was taken by the US, EU, UK, Canada, and other Western allies.

SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a Belgian communications system that was launched in 1973. It serves as a neutral platform for banks to chat about financial transfers, transactions, and trades.

Mitch Thomas, head of product development at a New York-based fintech company, FinLync, told Insider that Russia has got “a number of different routes” they can use to try and navigate around the ban. 

Benjamin Maltby, a partner at Keystone Law in the UK and an expert in yacht and luxury asset law, told Insider that it would be difficult for the sanctioned individuals to pay crew members. However, they would be able to use offshore companies to make payments. Therefore, crew members should be paid. 

Banning SWIFT isn’t as dramatic as it seems

Insider’s Zahra Tayeb previously reported that Thomas said: “It sounds good to be able to say that we’ve restricted communication with these banks via SWIFT but in reality, [Russia] has got a number of different mechanisms to get money out of the country.”

The statement echoed Dmitri Medvedev’s belief that cutting Russia off from the SWIFT banking system wouldn’t be “a catastrophe,” but would make bank communication “more difficult,” Insider’s Ben Winck reported. 

In a follow-up interview on Thursday last week, Thomas confirmed that the SWIFT ban is not as dramatic as you would expect it to be. “SWIFT is sometimes overstated with its impact and being able to move money,” he said.

“Of course, it makes things easier as you send a message to move money from bank to bank,” Thomas added. “But these are not Russian banks that are solely operating in Russia. SWIFT really restricts cross-border movements of money between banks.”

Crew leaving yachts

Whether the asset is seized, detained, or arrested, the maintenance costs will fall on the owner, Maltby said. “When a ship has been arrested, the maintenance carries on the same as normal.”

However, in the case of a superyacht being detained or seized, while maintenance should be carried on, the possibility of not being paid can worry crew members. 

Malby said: “If there is any risk of the crew not being paid, they will not think twice and leave the ship. Moreover, they may not want to work on the boats anyway now.” He added that they also might think it’s damaging to their long-term career prospects to be associated with sanctioned individuals or their alleged yacht.”

A superyacht that has been docked in Italy, rumored to belong to Putin, saw its Russian crew — also rumored to include Putin’s bodyguards — leave the ship, making way for a British crew to take over. 

Per Maltby, if crew members are not getting paid, they have no reason to stay.

Crew pay is a top maintenance cost for superyachts, which often have dozens of staff, Todd Roberts, president of Marine Boat Works in California, told Insider.

Without crew, yachts can quickly deteriorate and lose their value. Crew costs for a 150-foot yacht can stretch to $860,850 a year, according to Luxury Yacht Group’s online cost calculator.

Another expert, Michael Zlotowicz, who is the captain of New-York based motoryacht Justine, told Insider. “Crew on mega yachts are almost always employed and paid by a crew staffing or yacht management firm — not the owner.”

He added that the crew members “are unlikely to have personal loyalty to the owner and are likely to just be paid for their time and reassigned.”

“Crew are very transitory. People leave all the time for better opportunities or to avoid interpersonal disputes,” Zlotowicz said. “People rotate on and off different boats, it isn’t unusual to jump ship.”