Crucial payment hub severs ties with Tehran

Financial group vital for oil transactions makes unprecedented move to disconnect Iranian banks blacklisted by EU.

    Iranian leadership say their nuclear programme is for peaceful means [EPA]

    Iran has been largely cut off from global commerce after the company that handles worldwide financial transactions said it was severing ties with many Iranian banks to back European Union sanctions against Tehran.

    The action on Thursday by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) aims to enforce EU sanctions discouraging Tehran from developing nuclear weapons.

    It will go a long way toward isolating Iran financially.

    SWIFT is a banking hub crucial to oil, financial transactions and other trades and global financial transactions are impossible to conduct without using it.

    Because of its reach, SWIFT's decision to cut off some 30 Iranian banks and subsidiaries could hinder not only banking but also the country's lucrative crude oil industry and possibly hurt Iranian households that depend on remittances from relatives living abroad.

    "Disconnecting banks is an extraordinary and unprecedented step for SWIFT,'' said Lazaro Campos, chief executive of the company. "It is a direct result of international and multilateral action to intensify financial sanctions against Iran.''

    The announcements coincided with news that major money exchange houses in the United Arab Emirates, an important trading hub for Iran, have stopped handling the Iranian currency over the last several weeks.

    Affecting Iran

    SWIFT, a member-owned cooperative, has been described as the "glue" of the global banking system, handling daily payments estimated at more than $6 trillion.

    Expelling the sanctions hit Iranian banks from SWIFT will shut down a major avenue through which Tehran does business with the rest of the world.

    While the United States and Europe accuse Iran of seeking to develop nuclear weapons, Iran maintains its nuclear programme is for peaceful purposes.

    Nineteen banks and 25 affiliated institutions from Iran exchanged a total of 2 million cross-border payments using SWIFT in 2010.

    They included banks the US accuses of financing Iran's nuclear program or terrorism: Mellat, Post, Saderat and
    Sepah.

    The EU sanctions are aimed at forcing Iran to demonstrate to the international community that it is not trying to develop nuclear weapons.

    SOURCE: Agencies


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