SWIFT ready to cut Iranian banks out of global financial system

Belgium's Society for Worldwide International Financial Telecommunication, or SWIFT, announced today that it is preparing to discontinue its services to blacklisted Iranian financial institutions, the Wall Street Journal reported. It is expected the EU will ask the organization to cut off Iran’s banks by early March, the Wall Street Journal reported.

SWIFT's financial communications and clearing system enables banks to move funds around the world, Reuters reported. More than 9,000 banking organizations, securities institutions and corporate customers in 209 countries use SWIFT to transfer money internationally, The New York Times reported.

"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 organization said, according to the Wall Street Journal.

SWIFT has never cut off a country before, Reuters reported.

According to Reuters:

Nineteen banks and 25 affiliated institutions from Iran sent and received some 2 million messages in 2010. They included banks the US accuses of financing Iran's nuclear program or terrorism – Mellat, Post, Saderat and Sepah.

Both the EU and the US have already sanctioned Iran’s banks to punish Iran for pushing ahead with its uranium enrichment program, The New York Times reported.

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But this action, especially if it cut off Iran’s central bank, would essentially remove Iran from the global financial system, the Wall Street Journal reported.

United Against Nuclear Iran, a New York-based organization that wants harsher sanctions against Iran, said SWIFT’s action “has the potential to significantly isolate the Iranian regime from the world’s markets, and lessen the capital it has to pursue nuclear weapons and fund terrorism,” The Times reported.

But Reza Marashi, research director at advocacy group the National Iranian American Council, told Reuters: "Kicking Iran out of SWIFT is both unprecedented and another dangerous step toward turning a financial war into a military conflict."