SWIFT, as an organization, bills itself as a neutral player in the global economic system. That’s why the recent international flare-up over U.S. President Donald Trump’s decision to reimpose sanctions on Iran has hit the firm as a fairly direct challenge.
President Trump reactivated the U.S. sanctions against Iran last month. Unless the U.S. will grant an exemption, that act means SWIFT will be required to cut off targeted Iranian banks from its network by early November.
Failure to do so leaves the bank open countermeasures that can be taken against its board members as well as against the financial firms where they work. Those consequences could include — but are not limited to — asset freezes, U.S. travel bans and restrictions on banks’ ability to do business in the United States.
The incentive, then, to cut off Iran is there — but things are not so simple, says Nicolas Véron, senior fellow at the Peterson Institute for International Economics. SWIFT, as a cross-border payments lynchpin, set out to resist attempts to “weaponize” its service.
“The Europe-US-Iran issue is existential for SWIFT as a global network,” he said of the action against the company, which is owned by about 2,400 banks and other financial institutions.
This is not SWIFT’s first fight of a political nature.
In 2006, EU lawmakers were outraged to learn of a secret “Terrorist Finance Tracking Program” that allowed investigators to use SWIFT data held on a server in the U.S. SWIFT also found itself in the international spotlight in 2012 when it was ordered by the EU — following a U.S. initiative — to disconnect from sanctioned Iranian banks. Those disconnection were later reversed as part of the nuclear deal, but SWIFT has since argued that it ought not have its services used as a bargaining chip in negotiation between global governments.