The Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, is a member-owned cooperative that provides some 10,000 financial institutions worldwide with the means to exchange secure electronic financial messages. If you've ever transferred funds from one bank account to another, you've probably used SWIFT's ubiquitous secure messaging system. But on Feb. 2, the network will receive a different kind of message from the U.S. Congress: Stop facilitating Iranian financial transactions that violate U.S. and European laws.
The Senate Banking Committee is now hard at work on an amendment to new sanctions legislation making its way through Congress known as the Iran Sanctions, Accountability and Human Rights Act, filed by Sen. Robert Menendez (D-N.J.), and Sen. Roger Wicker (R-Miss.). Sen. Mark Kirk (R-Ill.), now recovering from a recent stroke, inspired the amendment, and in the spirit of bipartisanship, his colleagues are carrying it forward.
Based just outside Brussels and overseen by the National Bank of Belgium, SWIFT is the electronic bloodstream of the global financial system. It is composed of the most powerful financial institutions in the world. While other companies can enable secure financial transactions, SWIFT is the clear market leader. In other words, this legislation could have far-reaching ramifications.
Tehran uses SWIFT's technology to conduct business with its trading partners, to sell its oil, to raise capital for its energy sector, to procure energy-related equipment and technology, and to buy and sell other goods and services. Indeed, 19 Iranian banks and 25 Iranian entities reportedly used SWIFT more than 2 million times in 2010. These transactions, the Wall Street Journal noted in a recent editorial, amounted to $35 billion in trade with Europe alone. And they almost certainly violate existing sanctions laws. Cutting off this source of cash could be hugely consequential for those who seek to peaceably halt the Islamic Republic from developing a nuclear weapon.
SWIFT represents one of Tehran's last entry points into the world financial system. In recent years, the United States and the European Union have sanctioned scores of banks, energy companies, and other entities under the control of Iran's Islamic Revolutionary Guard Corps (IRGC) -- which Washington has designated a terrorist organization -- for their connections to nuclear proliferation and terrorist activities. This includes banks like Mellat, Sepah, Saderat, Post, and the Central Bank of Iran.
Opponents of further Iran sanctions will argue that eliminating Iran's access to SWIFT will destroy the Iranian economy. This was a common refrain during the legislative battle over Congress's bid to sanction the Central Bank of Iran, the Treasury Department's designation of 23 IRGC-controlled banks, and the 2010 congressional legislation imposing secondary sanctions on financial institutions that transact with the designated banks.