The world's largest electronic payment system says it will cut off Iranian banks blacklisted by the European Union, another step in the West's effort to further diminish Tehran's ability to finance its nuclear program.
The Belgium-based Society for Worldwide Interbank Financial Telecommunication, or Swift, said it would comply with an EU order to disconnect designated Iranian financial companies from its messaging system on Saturday at 1600 UTC.
Thursday's move follows a decision by the European Council, which represents EU member states, to tighten asset freezes on entities associated with Iran's nuclear activities, which Western powers say aims to produce atomic weapons. Iran maintains its nuclear program is for peaceful purposes.
Swift is a secure private network used by nearly every bank around the world to send payment messages that lead to the transfer of money across international borders. Its chief executive, Lazaro Campos, described the move as “extraordinary and unprecedented.” There was no immediate reaction from the Iranian government or the banks involved.
Expelling the designated Iranian banks from Swift will shut down Tehran's major conduit for doing business with the rest of the world. The West hopes that will pressure Iran into curbing its nuclear program.
The U.S. Treasury Department welcomed the EU step and Swift's “prompt” response, saying it would further isolate Iran's financial institutions.
A senior Treasury official said “today's action reinforces the isolation of designated Iranian banks from the international financial sector.”
The U.S. has designated 23 Iranian banks, many of which are also targeted by the EU. But U.S. lawmakers pushing for tougher sanctions on Iran said Swift needs to eradicate all Iranian financial institutions from its network, not just those blacklisted by the West.
Nineteen banks and 25 affiliated institutions from Iran made a total of two million cross-border payments using Swift in 2010. They included banks the United States accuses of financing Iran's nuclear program or terrorism – Mellat, Post, Saderat and Sepah.
Swift facilitates not only large bank-to-bank transfers, but small ones as well. Many Iranians, including opponents of the current government, live abroad and send small amounts of money to their families in Iran on a regular basis. Such transfers would be blocked.
Thursday's step comes ahead of renewed talks on Iran's nuclear program expected next month between Tehran and six major powers.