The world's biggest electronic payment system will Saturday cut off Iranian banks blacklisted by the European Union in an attempt to further strangle Tehran's ability to finance a nuclear programme.
Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), which facilitates the bulk of global cross-border payments, said it would disconnect designated Iranian financial firms from its messaging system today at 1600 GMT after European regulators ordered the company to do so.
"The EU decision forces SWIFT to take action," SWIFT Chief Executive Lazaro Campos said in a statement on Thursday. "Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran."
SWIFT has been described as the glue of the global banking system, handling daily payments estimated at more than $6 trillion (Dh22 trillion).
Expelling the designated Iranian banks from SWIFT will shut down a major avenue through which Teh-ran does business with the rest of the world. That, the West hopes, will pressure Iran into curbing its nuclear programme.
SWIFT's move will follow a decision by the European Union Council, which represents EU member states, to tighten asset freezes on a number of people and entities associated with Iran's nuclear activities, which western powers think aim to produce a weapon. Iran maintains its nuclear programme is for peaceful purposes.
"The Council agreed that no specialised financial messaging shall be provided to those persons and entities subject to an asset freeze," said the Council.
The Obama administration applauded the EU decision and said it reflected consensus in the international community that "substantially increased pressure" was needed to convince the Iranian government to address their concerns about its nuclear programme.
But US lawmakers pushing for tougher sanctions on Iran said SWIFT needed to eradicate all Iranian financial institutions from its network, not just those blacklisted by the West.
Overseas businesses to be hit hard
Overseas Iranian businesses said the move might strangle their operations. One said he had been expecting SWIFT to act in a few months, and was surprised at the news on Thursday.
"It will make life even more difficult for us than before, because this is like our lifeline to the outside being cut," Nasser Shaker, who owns an oil and gas trading company in Dubai, told Reuters by phone.
"If Iranian banks cannot exchange payments with banks around the world, then this will cause the collapse of many banking relations and many businesses," said Morteza Masoumzadeh, a member of the executive committee of the Iranian Business Council in Dubai and managing director of the Jumbo Line Shipping Agency.