Iranian Banks Reconnection to SWIFT
Nuclear deal and lifting of international sanctions has opened a new horizon for Iran and countries around the world.
Iranian banks re-joined the global banking system after four yours cut off from SWIFT, the Society for Worldwide Interbank Financial Telecommunication. Iranian banks were disconnected in March 2012 because of international sanctions over nuclear program.
SWIFT is a global supplier of secure messaging services and interface software to wholesale financial entities. It is a secure private network used by nearly every bank around the world to send payment messages that lead to the transfer of money across international borders.
Re-engagement with the banking world through the SWIFT system is vital for Iran’s trade, particularly for country’s oil export. It’s worthy to say that establishment of strong economic cooperation needs clear and transparent banking.
But there are some obstacles to Iranian banks’ reconnection to international banking system. Although Iranian banks can access SWIFT, but they should obviously prepare the necessary infrastructures as they are no longer up to date after all the years in deprivation.
Iranian central bank has implemented new rules against money laundering and terrorism funding to facilitate relations with foreign banks.
Despite the removal of the sanctions, for many foreign banks there are concerns about being caught up in ongoing US sanctions.
Although many international sanctions relating to Iran’s nuclear program were lifted but some involving US measures remain in place. Non-US banks may trade with Iran without concern of punishment in the United States but US banks prohibited trades with Iran directly or indirectly. Sanctions prevent US banks and insurers from any trade with Iran and also prohibit any transaction with Iran in US currency from being processed via the US financial system. This is a significant complication because of dollar’s role in the world business.
Most of European banks are reluctant to resume transactions as they are worried about the consequences of collaborating with Iranian partners due to past experiences of some banks regarding US legal problems and penalties for breaking sanctions and it is hard to change minds and policies for restarting business with Iran. Thus actual activity has remained very limited.
To conclude there is no legal obstacle in Iran and Europe relations to be expanded and both sides keen on expansion of relations based on their interests and benefits. Iran is a very attractive market for business and the world know that. While international banks are expected to link up with their Iranian counterparts via SWIFT, Iran will also be looking to encourage foreign institutions to expand involvement in the country’s financial system.