Who’s the boss? SWIFT defies EU, caving in to US pressure to cut off Iranian banks
“In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, SWIFT is suspending certain Iranian banks’ access to the messaging system,” SWIFT said.
The Belgium-based financial messaging service added: “This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system.”
SWIFT’s decision further undermines EU efforts to maintain trade with Iran and save an international deal with Tehran to curtail its nuclear program, after President Donald Trump pulled the US out in May. Being cut off from SWIFT makes it difficult for Iran to get paid for exports and to pay for imports.
Last week, US Treasury Secretary Steven Mnuchin warned SWIFT it could be penalized if it doesn’t cut off financial services to entities and individuals doing business with Iran. However, by complying with Washington, SWIFT now faces the threat of punitive action from Brussels.
Washington has been pressuring SWIFT to cut off Iran from the financial system as it did in 2012 before the nuclear deal. Six years, ago the EU imposed sanctions on Iranian banks, forcing SWIFT, which is subject to EU laws, to cut financial transactions with at least 30 of Iran’s financial institutions, including the central bank.
Iranian banks were reconnected to the network in 2016 after the Iran nuclear deal came into force, allowing much needed foreign cash to flow into Tehran’s coffers.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a financial network that provides high-value cross-border transfers for members across the world. It is based in Belgium, but its board includes executives from US banks with US federal law allowing the administration to act against banks and regulators across the globe. It supports most interbank messages, connecting over 11,000 financial institutions in more than 200 countries and territories.
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