Belgium-based SWIFT, which provides banks with a system for moving funds around the world, bowed to international pressure on Friday and said it was ready to block Iranian banks from using its network to transfer money.
Expelling Iranian banks from the Society for Worldwide Interbank Financial Telecommunication would shut down Tehran’s main avenue to doing business with the rest of the world – an outcome the West believes is crucial to curbing Iran’s nuclear ambitions.
SWIFT, which has never cut off a country before, has been closely following efforts in the United States and the European Union to develop new sanctions targeting Iran that would directly affect EU-based financial institutions.
The United States and EU have already moved to sanction Iran’s central bank.
“SWIFT stands ready to act and discontinue its services to sanctioned Iranian financial institutions as soon as it has clarity on EU legislation currently being drafted,” the company said in an emailed statement.
The United States has been pushing the European Union to force SWIFT to evict the Iranian firms but it was unclear whether the EU would reach an agreement.
For one, SWIFT’s home country, Belgium, does not think the global banking firm should be the only company of its kind required to comply with sanctions.
The Obama administration said it welcomed SWIFT’s intention to stop transactions involving designated Iranian banks. “We will continue to be in contact with our EU partners to urge action on this issue,” a U.S. Treasury official said.
SWIFT, with headquarters just outside the Belgian capital Brussels, is vital to international money flows, exchanging an average 18 million payment messages per day between banks and other financial institutions in 210 countries.
The United States and Europe accuse Iran of seeking to develop nuclear weapons. Iran maintains its nuclear program is for peaceful purposes.
The United States recently enacted sanctions that would punish countries and institutions if they do not reduce their purchases of Iranian oil by mid-year.
One of the lawmakers who has pushed for the sanctions said she was pleased SWIFT would move to cut Iran out of the global banking system, but said the United States needs to ensure it enforces all its sanctions laws.
“In addition, we must sanction Chinese energy companies that throw Iran an economic lifeline by continuing to do business as usual,” said Ileana Ros-Lehtinen, the Republican chairman of the House of Representatives Foreign Affairs Committee.
SWIFT, founded in 1973, said its decision reflected the extraordinary circumstances of international support for the intensification of sanctions against Iran.
The company said it had informed its regulators, the world’s largest central banks, of its decision.
SWIFT’s general counsel is slated to visit Washington next week to meet with lawmakers who have proposed new sanctions targeting its services.