Payment Giant SWIFT Cuts Iran From Global Financial Network

Money transfer giant SWIFT announced Thursday it will block Iranian banks from using its network to move funds around the world on Saturday, effectively locking Tehran out of the global financial system.

The Belgium-based Society for Worldwide Interbank Financial Telecommunication took the unprecedented step after intense international pressure, it said in a statement.

On Saturday at 1600 GMT, SWIFT will cut off the blacklisted institutions, severing Iran's financial links with the rest of the world.

The move comes amid a new wave of sanctions designed by the United States and European Union to further pressure Tehran to halt its suspected development of nuclear weapons.

"This EU decision forces SWIFT to take action," SWIFT Chief Executive Lazaro Campos said, according to the Associated Press.

"Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran."

SWIFT was created by banks in 1973 as a cooperative to securely and quickly transfer money around the globe.

Virtually every bank and the vast majority of corporations use the SWIFT messaging service -- with 10,000 users in 210 countries it is often described as the "glue" of the global financial system.

The action will affect 30 Iranian banks and is set to cripple not only banking but also the country's lucrative crude oil industry, which relies on electronic transfers to receive payments for the vital commodity.

The EU hopes the block will tighten sancations against Iran, which will have to turn to other wire transfer services or more risky bartering in commodities such as gold to pay for oil trades.

"It will make life even more difficult for us than before, because this is like our lifeline to the outside being cut," Naser Shaker, who owns an oil and gas trading company in Dubai, told Reuters by phone.

"All the transactions will be stopped. Through the banks, there are no more options."

According to Reuters, 19 banks and 25 affiliated institutions from Iran sent and received some 2 million messages in 2010.

They include the banks Mellat, Post, Saderat and Sepah, institutions the U.S. asserts facilitate Iran's nuclear program or sponsor terrorism.