October 27, 2018
The United States Treasury Department is considering imposing sanctions on the Belgian-based financial messaging service SWIFT that facilitates the bulk of the world’s cross-border money transactions, days before the second wave of US sanctions on Tehran take effect.
The move is meant to pressure SWIFT into disconnecting Iran from the network and forcing it to separate Iranian banks from the global banking system.
US Treasury Secretary Steven Mnuchin had confirmed that it will be harder for countries to get waivers on Iran oil sanctions than during the Obama administration and dismissed concerns that oil prices could rise, saying the market had already factored in the losses.
Mnuchin was adamant that countries would eventually have to cut imports to nil.
Washington has been pressuring SWIFT to cut Iran from the system. Although the US does not hold a majority on SWIFT’s board of directors, the Trump administration could impose penalties on SWIFT unless it disconnects from Iran.
“I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism,” he said, “Our focus is to make sure that the sanctions are enforced.”
Iran’s revenues are set up to receive a serious blow if SWIFT sanctions are enforced.
Many US top officials came out to agree with the tough stance on SWIFT.
White House National Security Adviser John Bolton pressed SWIFT to rethink dealing with Tehran.
According to Bolton, Washington does “not intend to allow sanctions to be evaded by Europe or anybody else.”
There will be a tight window for the US president to backpedal a decision if it’s made on sanctioning SWIFT. The US administration will determine which Iranian banks are blacklisted. So far, Iran’s central bank and a handful of others have been barred.
“Sanctions on transactions by foreign financial institutions with the central bank and designated Iranian financial institutions; sanctions on the provision of specialized financial messaging services to the central bank of Iran and Iranian financial institutions; sanctions on the provision of underwriting services, insurance, or reinsurance; sanctions on Iran’s energy sector,” will be re-imposed on November 5, according to the US Treasury Department.
The most important challenge facing the US administration is how to get European allies on the same page on isolating Iranian banks from the global banking system.
Some Treasury officials worry that forcing Europe, by threatening to impose sanctions on SWIFT, could undermine America’s broader efforts to persuade Europe to stop supporting Iran.