from ZeroHedge:

As reported last week, shortly after SWIFT caved to US pressure and defied the EU announcing it would cut off a selection of Iranian banks, on Monday, the US Treasury said the Iranian Central Bank has been officially cut off the SWIFT financial messaging system. The disconnection, which comes at a time when Iran’s economy is reeling and its currency is tumbling as a result of restricted oil exports (albeit offset by numerous temporary waivers for top Iranian oil clients), will made it far more difficult for the Islamic Republic to settle import and export bills.

Treasury Secretary Steven Mnuchin said that the move is “the right decision to protect the integrity of the international financial system”, and comes after several days planning by SWIFT.

I understand that SWIFT will be discontinuing service to the Central Bank of Iran and designated Iranian financial institutions. SWIFT is making the right decision to protect the integrity of the international financial system.

— Steven Mnuchin (@stevenmnuchin1) 8 November 2018

As previously discussed, SWIFT said it would begin cutting off access to several unspecified Iranian banks. More than 70 Iranian and Iranian-linked financial institutions were sanctioned, including a host of banks that allegedly provided services to Hamas and Hezbollah, and others that provided services to the Iranian armed forces.

While the US could not directly force SWIFT to cut off Iranian banks, US Secretary of State Mike Pompeo had warned that penalties would be applied to SWIFT and any other firms that refused to comply with the latest sanctions, effectively forcing SWIFT to pick between compliance with US demands or angering top EU officials. It picked the former.

An allegedly “neutral” entity, SWIFT had found itself torn between a US-EU diplomatic row as of late. Scrambling to save the 2015 Joint Comprehensive Plan of Action (JCPOA), or Iran deal, EU leaders enacted a ‘blocking’ law in August, prohibiting firms operating in the bloc from complying with the US sanctions. Ironically, in siding with Washington, SWIFT, which is based outside Brussels, may face penalties in Europe.

To overcome what is de facto US veto power on global money transfers, European leaders are planning on introducing an alternative system to ensure that payments to and from Iran can be processed. However, as Reuters reported last week, such a system will not be ready until some time in 2019, prompting Iran’s deputy foreign minister Kazem Sajjadpou to express frustration last week with the delay, saying “what is lacking is both speed and efficiency.”

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