SWIFT, the global bank-transfer messaging service, said it is prepared to impose sanctions against Iranian financial institutions once the European Union presents implementing rules on its restrictions.
"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 Society for Worldwide Interbank Financial Telecommunication said today in a statement.
Iran would be the first country to be cut off by SWIFT, according to Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington policy group, who has advised the Obama administration and congressional offices on SWIFT and other sanctions measures.
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"If strictly implemented, this could deny Iran's banks the ability to move billions of dollars in financial transactions, and put immense pressure on Iran's leaders to reconsider their policies," he said. "The international sanctions on the Iranian regime are the last remaining hope of bringing a peaceful end to its unlawful nuclear pursuits, terrorist activities, and human rights abuses"
While the European sanctions agreed to on Jan. 23 are already binding on EU governments, the bloc's regulator is working on regulations to make them required at the company level.
"We understand that the European Union is now drafting new international sanctions regulations which directly affect the ability of EU-based financial communication service providers such as SWIFT to provide their services to Iranian financial institutions subject to EU sanctions," the member-owned institution said. "In addition, we are closely following the progress of a bill passed by the U.S. Senate Banking Committee regarding Iran which has similar intention."
SWIFT said its decision "reflects the extraordinary and highly exceptional circumstances of significant multi-lateral international support for the intensification of sanctions against Iran."
Dubowitz said it will be important to see how SWIFT treats the central bank of Iran, which handles much of the country's receipts from oil exports. Iran is the second-largest producer in OPEC after Saudi Arabia.
"Will it expel the CBI along with other European-sanctioned banks?" he said. "Or will it quarantine its transactions so that the CBI will be limited only to humanitarian-related trade and to specific oil market transactions with international financial institutions that conform to U.S. law?"
Bloomberg News
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