Swift, the Society of Worldwide Interbank Financial Telecommunications, has announced that it will no longer work with Iranian companies under EU sanctions.
The unprecedented step will remove about 30 Iranian financial institutions from the Swift network and halt their ability to conduct international business.
Reuters reports that starting March 17, at 4PM Greenwich Time, Swift will cut off all its services to Iranian banks.
Swift’s chief executive Lázaro Campos admitted that “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.”
As a result, the transfer of money out of Iran through official channels will be virtually impossible and trade will be restrained.
The move by Swift comes after the European Union announced on January 23 that all its member states will stop buying oil from Iran beginning July 2012. The EU has put Iranian banks and financial institutions, including Iran’s Central Bank, under sanctions.
The last report from the International Atomic Energy Agency indicated that it was not convinced that Iran’s nuclear program has no military component. Iran insists that its nuclear program is peaceful.
The Swift network connects more than 10,000 financial institutions and corporations in 210 countries, providing for the secure exchange of automated financial information.
In the U.S., advocates of stronger sanctions had been pressuring Swift for more than a month to close a loophole that allowed sanctioned banks to evade penalty.