SWIFT, the Brussels based transaction provider, announced it has been instructed to cut services to Iranian financial institutions that are subject to European sanctions, in order to comply with the EU Council directive.
The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is crucial to Iran’s oil and other trade.
The EU Council decision prohibits companies such as SWIFT from continuing to provide specialized financial messaging services to EU-sanctioned Iranian banks. They, alongside the SWIFT customer community have been notified of the disconnection, which will become effective on Saturday 17 March at 16.00 GMT.
A statement on the SWIFT website said “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.”
The EU Council has already imposed asset freezes and other restrictions on a number of people and organizations associated with Iran’s nuclear activities. Iran’s ban from SWIFT ups the pressure aiming to persuade Iran to drop its nuclear program.
The move may also buy time for the US to dissuade Israel from launching a pre-emptive military strike on the Islamic Republic.
Some believe the plan might actually backfire. It could send oil prices soaring and undermine SWIFT’s reputation. The Brussels-based organization is a banking hub used by virtually every nation and corporation around the world – but it is also forced to abide by EU Council decisions.