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SWIFT’s Response to the U.S. Iran Sanctions Threat

Summary:
SWIFT, the international financial messaging system, has responded to the U.S. sanctions threat (see this post)—it has agreed to comply. Michael Peel reports in the FT, that SWIFT suspends certain Iranian banks’ access to its cross border-payment network. According to Peel, SWIFT explains the step as follows: “This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system.” This does not only expose SWIFT to punitive actions by the European Union since … new EU rules … forbid companies from complying with the US Iran sanctions. It also seems to contradict the explanations that SWIFT provides on its homepage: [w]hilst sanctions are imposed independently in different jurisdictions around the world, SWIFT cannot arbitrarily

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SWIFT, the international financial messaging system, has responded to the U.S. sanctions threat (see this post)—it has agreed to comply. Michael Peel reports in the FT, that SWIFT

suspends certain Iranian banks’ access to its cross border-payment network.

According to Peel, SWIFT explains the step as follows:

“This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system.”

This does not only expose SWIFT to punitive actions by the European Union since

… new EU rules … forbid companies from complying with the US Iran sanctions.

It also seems to contradict the explanations that SWIFT provides on its homepage:

[w]hilst sanctions are imposed independently in different jurisdictions around the world, SWIFT cannot arbitrarily choose which jurisdiction’s sanction regime to follow. Being incorporated under Belgian law it must instead comply with related EU regulation, as confirmed by the Belgian government.

Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

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