Banking group faces pressure to cut Iran ties

Lawmakers will push forward with legislation targeting a worldwide banking cooperative despite its decision to stop doing business with some Iranian banks.

On Thursday, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced that it would comply with new European Union (EU) sanctions and not provide financial messaging services to designated Iranian banks. The EU, like the United States, is worried about Iran’s nuclear program.

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Some of SWIFT’s most ardent critics praised the move, but also pledged to continue pushing for tougher sanctions. 

“It’s a good positive step forward and it will cause real difficulties for the regime,” said Mark Wallace, president of United Against Nuclear Iran (UANI). “But to get the job done, SWIFT should deny access to all Iranian banks and, at a minimum, should comply with U.S. law.”

Wallace, a former U.S. ambassador to the United Nations during the George W. Bush administration, said SWIFT’s decision to follow only the EU sanctions would not create the “international banking blockade” that is needed.

“There’s a huge difference,” Wallace said. “They have gone for the most narrowest subset, which is just the EU-designated institutions.”

SWIFT, which allows its members to securely share financial payment information, connects more than 10,000 financial institutions in 210 countries. The group’s 2010 annual report said it had 19 Iranian banks among its members and processed close to 2.3 million messages for them that year.

Lawmakers on Capitol Hill seem eager for SWIFT to go further. Rep. Ileana Ros-Lehtinen (R-Fla.), chairwoman of the House Foreign Affairs Committee, said in a statement Friday that SWIFT had taken “positive steps” but should move against all Iranian banks.

“In order to have the kind of impact we need, the EU must extend its sanctions beyond the currently designated Iranian banks and SWIFT must cut off its services to all Iranian financial institutions,” Ros-Lehtinen said.

A Ros-Lehtinen aide said the lawmaker would continue pushing legislation she co-authored with Rep. Brad Sherman (D-Calif.) that would prevent SWIFT from completing transactions with any Iranian financial institutions, not just those currently designated by the EU.

Similar legislation has already moved in the Senate. Sen. Robert Menendez (D-N.J.) attached an amendment that specifically targets SWIFT to an Iran sanctions bill, which was approved by the Senate Banking Committee last month.

In a statement Thursday, Menendez applauded EU and SWIFT for expelling Iranian banks and said “we will not facilitate the financing of [Iran's] nuclear weapons program by allowing their participation in the international financial system.”

But the New Jersey Democrat is unlikely to drop his amendment. His office cited worries about other companies snapping up SWIFT’s former business with Iran’s banks.

“This was the action we intended to provoke when we offered the amendment in the Banking Committee. We were pleased that SWIFT didn't fight on it,” said a Menendez aide. “Having said that, I don't see us pulling the amendment out of the bill. We are in the process of rewriting it to make sure no one back-fills behind SWIFT.”

The aide predicted the tough language against financial messaging providers would stay in the Senate bill.

“I think you will still see language in the final bill that will authorize sanctions against financial messaging providers and their board of directors if they continue to provide services to designated Iranian banks, including the Central Bank of Iran,” said the aide.

In January, UANI launched an intensifying campaign against SWIFT to stop letting Iranian banks use its services. The group sent a letter to SWIFT that said the group was violating U.S. and EU sanctions against Iran, which was also shared with U.S. lawmakers as well as the members of SWIFT’s board of directors.

Since then, three different firms — APCO Worldwide, Cleary Gottlieb Steen & Hamilton and the Rich Feuer Group — have registered to lobby on Iran sanctions on behalf of SWIFT, according to lobbying disclosure records.

A Cleary Gottlieb partner declined to comment for this piece, while an APCO lobbyist referred questions to Eva Zaeschmar, a SWIFT spokeswoman.

“The firms are advising us on discussions we’ve had recently with U.S. legislators regarding Iranian sanctions,” Zaeschmar said.

Zaeschmar also said Cleary Gottlieb has worked for the group for 10 years and that they engaged APCO last year to help them on issues not related to Iran. Both firms have just recently registered as lobbyists on SWIFT's behalf.  

Zaeschmar referred questions about SWIFT's positions on sanctions against Iran to the group's website.

On Thursday, the banking cooperative said it would discontinue its services to Iranian financial institutions that are subject to EU sanctions.

“This EU decision forces SWIFT to take action” said Lázaro Campos, SWIFT’s CEO, in a statement. “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.”

That followed a Feb. 17 statement by SWIFT that said it would be ready to implement sanctions against Iranian financial institutions once the EU weighed in.

Wallace of UANI said the turn to K Street by SWIFT still makes him skeptical of the cooperative’s intentions.

“When you are registering those lobbyists, you are looking to limit the scope of the force of law against you. I’m suspicious that SWIFT will still be resistant to broader U.S. law and seek to still provide services to some Iranian banks,” Wallace said.