The governor of the Central Bank of Iran, Abdolnaser Hemmati, has said that his country and Russia will begin transferring payments using an alternative system to the internationally recognized SWIFT money transfer network, RIA Novosti reports.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) facilitates cross-border payments between 11,000 financial institutions in more than 200 countries worldwide. The two countries will stop using the Belgium-based global system and utilize their own domestically developed financial messaging systems – Iran’s SEPAM and Russia’s SPFS.
“Using this system for trade and business exchanges between the Eurasian Economic Union (EAEU) member states can help develop and expand trade exchanges between the member states as well,” Hemmati said on Tuesday.
Tehran is set to officially join EAEU, the Russia-led free-trade zone, next month. The document on Iran’s participation was ratified in June by the nation’s parliament (Majlis) and President Hassan Rouhani has already ordered that the free trade zone agreement be implemented.
Earlier this month, Russian presidential aide Yury Ushakov said that Tehran and Moscow are developing an alternative to SWIFT. Russia began development of SPFS in 2014 amid Washington’s threats to disconnect the country from SWIFT.
The first transaction on the SPFS network involving a non-bank enterprise was made in December 2017. Around 500 participants, including major Russian financial institutions and companies, have already joined the payment channel.
Last year, SWIFT cut off some Iranian banks from its messaging system. The move came after U.S. President Donald Trump pulled the U.S. out of the landmark nuclear deal with the Islamic Republic and resumed sanctions against Tehran.