Central Bank of Iran: No Disruption in Foreign Trade Expected Due to SWIFT Cut

One day after the U.S. Treasury Deputy Secretary stated that SWIFT, the international banking transaction system, had stopped providing services to the Central Bank of Iran and several financial institutions, the Central Bank of Iran announced that the foreign trade of Iranian merchants would not be disrupted by the SWIFT cut. SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging network for transferring money between banks globally. Without this entity's services, transactions for Iranian banks, even with clients willing to trade with them despite U.S. sanctions, will become more difficult. Sigal Mandelker, the U.S. Treasury Deputy Secretary, announced on Monday at a press conference that SWIFT had recently ceased services to the Central Bank and several financial institutions in Iran. In response to the SWIFT service cut, the Central Bank of Iran stated on Tuesday, November 22, that 'this system does not play a role in maintaining accounts and currency settlements, and no disruption in currency exchanges and foreign trade is anticipated due to the cessation of SWIFT services.' According to Mehr News Agency, the Central Bank further stated: 'Considering the possibility of the cessation of these services, alternative messaging systems have been anticipated, developed, and operationalized for a long time to cover the capabilities and services of SWIFT.' The announcement concluded: 'Therefore, with the cessation of SWIFT services to some domestic banks, no disruption in currency exchanges and the foreign trade process is anticipated, and economic actors can confidently use the services of all licensed currency banks for their commercial affairs.' The Central Bank did not provide further details about the feasibility of using 'alternative messaging systems' and how such systems would be accepted by global banks. The Central Bank's announcement regarding the 'non-disruption' of international trade for Iranian merchants comes as Ezzatollah Yousofian Molla, a member of the Parliament's Program, Budget, and Calculations Commission, stated on Monday: 'A list of sanctioned banks for connection to SWIFT has been published, and all banks that have licenses for international activity are on this blacklist.' According to the House of the Nation news agency, he continued: 'The claim that some Iranian banks are still connected to SWIFT does not mean that the U.S. has exempted some banks from these sanctions; rather, it seems that smaller banks that do not have international activity licenses or cooperative funds that have labeled themselves as banks have been exempted from these sanctions.' This parliament member regarding banking licenses stated: 'Banks that are acceptable in international forums must have figures, codes, and levels of international transactions. Certainly, these 12 banks have not been at the international level to not be on the blacklist, and the U.S. has not spared any bank.' Mr. Yousofian Molla emphasized: 'It seems that these banks have international issues and do not have the capacity for international transactions, which is why they have not been placed on the blacklist; however, even if they can operate internationally, other banks will be reluctant to cooperate with Iran for fear of U.S. penalties.' During the return of heavy U.S. sanctions against Iran, some Iranian banks are under primary sanctions, meaning no individual, company, or American citizen is allowed to conduct business with them, while others are also on the U.S. secondary sanctions list, meaning no person or company in the world can conduct business and financial transactions with these banks without facing heavy penalties. According to ISNA, currently, about 19 Iranian banks are only on the U.S. primary sanctions list, and it is highly likely that their access to the SWIFT system will not be cut. Based on this report, the banks that are not on the U.S. secondary sanctions list include Sarmayeh, Saman, Karafarin Iran, Kish International, Eqtesad Novin, Shahr, Agriculture, Middle East, Maskan, Pasargad, Tose'e Ta'avon, Kafalat, Qarz al-Hassaneh Resalat, Iran Zamin, Islamic Regional Cooperation, Tourism, Mehr Iran, Hikmat Iranians, and the Financial Development Institute of Banks and Institutions, according to the latest changes in the U.S. sanctions list.