But even though this concern has not yet come to pass, it should not be dismissed out of hand. Like the Central Bank sanctions that President Barack Obama signed into law in December 2011, any new legislation should allow Iranian banks access to SWIFT to buy food, medicine, and medical devices. It should also allow Iran to sell some of its oil to mitigate the risk of a spike in global oil prices, as long as those sales meet guidelines on oil trades governed by existing U.S. law.
But for all of the warnings against sparking a humanitarian crisis in Iran, it's important to remember that there's an equally strong humanitarian justification for sanctions that deter the most dangerous state sponsor of worldwide terrorism from crossing the nuclear threshold. One can only imagine the humanitarian crises an Iranian nuclear strike could precipitate.
In today's uncertain economy, some Wall Street purists may also find it unsettling that a system so vital to the global financial system could be denied to anyone -- even the violent, repressive regime in Tehran. There are also concerns that SWIFT could become a political football in regional conflicts. China, for example, could use this precedent to agitate for the expulsion of Taiwanese banks from the SWIFT system. U.S. administration officials also may fear the rise of a SWIFT competitor that would cater to the needs of China and other countries and that would place less of a priority on preventing money laundering, nuclear proliferation, or terrorism finance.
These potentially troubling scenarios are not to be taken lightly. But they should not absolve SWIFT of its responsibility to abide by its own bylaws, which require that "its services should not be used to facilitate illegal activities" and that can prohibit access if a "user is subject to sanctions." Moreover, senior executives of the global financial institutions that form the board of SWIFT have the power to expel a user who "has adversely affected … SWIFT's reputation, brand, or goodwill."
That is an authority that SWIFT's executives should exercise if they are concerned about their reputations and that of this important cooperative. Indeed, SWIFT's integrity and reliability have made it the unquestioned market leader over the years. Adhering to its own rules will only serve to reinforce the image of transparency it seeks to project.
SWIFT should also abide by local laws. As a SWIFT spokeswoman told the Wall Street Journal, "all decisions on the legitimacy of financial transactions under applicable regulations … rest with financial institutions and the competent international and national authorities." In the United States and the European Union, the laws are quite clear about the responsibilities of international institutions for dealing with a great many Iranian financial institutions.