Iran introduces domestic network to replace SWIFT

Business Materials 19 October 2013 16:11 (UTC +04:00)

Azerbaijan, Baku, Oct.19/ Trend F.Karimov/

The Central Bank of Iran has developed a domestically-designed network that enables financial institutions to send and receive electronic messages about financial transactions in a secure, standardized and reliable environment, replacing SWIFT, in a bid to circumvent the international sanctions against the country's banking system, the Tasnim News Agency reported.

The Central Bank's secretary general Mahmoud Ahmadi has said in his statement that the new network, abbreviated as SEPAM, will enable financial institutions to send and receive electronic messages about financial transactions in a secure, standardized and reliable environment, without the need to SWIFT (the Society for Worldwide Interbank Financial Telecommunication).

On September 21, the Fars News Agency quoted an informed source in the Iranian banking system as saying that SWIFT is likely to resume cooperation with Iranian banks as some of the international sanctions against the banks have been annulled.

Companies, which have lost their Iranian customers due to the sanctions, are interested in restoring cooperation with the banks, the source said.

"SWIFT has a number of agencies, some of which have become active to offer services to the banks which have been exempted from the sanction."

While the U.S. is likely to try to slow down Iran's reintegration into Swift, Swift is a European based organization subject to European law, Senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies, James M. Dorsey told Trend on Tuesday.

The expert was commenting on the recent news on Iranian Tose-e Saderat (Exports Development) Bank's announcement, as it plans to start talks with EU to re-establish its connection with SWIFT, as soon as EU court upholds its initial ruling for the removal of sanctions against the Bank.

"Ultimately, the U.S. will have to comply. Individual banks will however retain the right not to do business with Iran as will their account holders," Dorsey underscored.

Managing-Director of Iran's Tose-e Saderat Bank, Bahman Vakili said on Sept. 16 that his bank will start talks with EU bank officials to reestablish the SWIFT link between the two sides.

"We will negotiate with them on the re-establishment of SWIFT (the financial messaging provider for more than 10,000 banking organizations, securities institutions and corporate customers) connections after the EU court issues its final verdict," Vakili told reporters in Tehran.

He said his Bank is now waiting for the EU court's final verdict after it ruled in favor of Tose-e Saderat Bank in its initial ruling and called on the European countries to provide it with strong evidence to substantiate their claim that the Bank has acted against the international laws and has helped Iran's peaceful nuclear program.

He added that since the EU members seem to have no corroborative evidence to substantiate their claims against the Bank, the court's final verdict will certainly be issued in favor of the Tose-e Saderat Bank, similar to what happened to Iran's Bank Mellat earlier this year.

Earlier this month, the European Union's top court thrown out sanctions imposed against eight Iranian banks and companies for their alleged ties to Iran's nuclear energy program.

The European Court of Justice in Luxembourg ruled that there was not sufficient evidence to justify the unilateral sanctions imposed by the bloc on the Iranian entities.
In January, Managing-Director of Bank Mellat (the largest private bank in Iran) Ali Divandari announced that his bank has been removed from the EU's sanctions list.