SWIFT agreement to comply with US sanctions at the expense of EU regulations

  • Belgian-based SWIFT has agreed to suspend certain Iranian banks’ access to its network, following US threats to sanction SWIFT for not doing so.

    SWIFT is the international financial messaging system which facilitates cross-border payments. It does not hold funds or process transactions, it is simply a messaging platform used by financial institutions to send information about transactions. SWIFT considers itself to be a “neutral global cooperative”. It therefore seems surprising that it would be impacted by these US measures. However, under previous international sanctions against Iran, SWIFT denied Iranian banks access to its service which is thought to have significantly contributed to crippling Iran’s economy, forcing the country to negotiate. It is therefore not surprising the Trump administration pressured SWIFT in this instance in order to ensure the US sanctions have maximum impact.

    The EU is strongly opposed to the US decision to withdraw from the JCPOA and re-impose sanctions on Iran. It has looked for ways to get around the sanctions and protect EU companies, including reviving the EU Blocking Statute which forbids EU companies from adhering to the new US sanctions. Belgian-based SWIFT shows that EU companies fear OFAC enforcement action significantly more than the EU.

  • It kinda makes sense if you know that section 220 of Iran Threat Reduction and Syria Human Rights Act of 2012 was snapped back after the decission to leave the JCPOA. And providing technological support to Iran SDN listed entities is also subject secondary sanctions.

  • It seems SWIFT was strong-armed into compliance this time. In 2012 SWIFT was complying with EU sanctions against Iran, when there were arguably more justifiable reasons for the sanctions. Therefore even if there was no legal requirement for SWIFT to comply in 2012, it might have done so for moral reasons. SWIFT’s own statement used words like “regrettably” when having to comply with these US sanctions