Russia, Iran substitute to SWIFT links over 800 banks

As many as 700 Russian banks and 106 non-Russian banks from 13 countries can exchange financial messages with Iranian banks, the deputy governor of the Central Bank of Iran (CBI) says.

The central banks of Iran and Russia on Sunday signed a deal to connect their national interbank communication and transfer systems to help boost trade and ease two-way bank transactions.

“Under the deal, the national banking messaging systems of the two countries were connected, making it possible for all member banks of the national banking messaging system of Iran to exchange banking messages with all banks in Russia,” Mohsen Karimi told Fars news agency.

The system allows financial institutions in the two countries to open letters of credit or process money orders and bank guarantees. This means they do not need the SWIFT international messaging system for payments, Karimi said.

“By connecting the national messaging systems of Iranian and Russian banks, about 700 Russian banks can exchange financial messages with Iranian banks. Apart from these Russian banks, 106 non-Russian banks from 13 other countries can connect with this messaging system and have financial exchanges with Iranian banks.”

To begin with, a bank from Iran and another from Russia were chosen to exchange the first message, Karimi said, adding a technical delegation of the central bank of Russia will travel to Iran in the comings days to provide the groundwork for communication and dispatch of messages among all banks of the two countries.

According to the CBI website, 52 branches of Iranian banks and four unnamed foreign banks will use Iran's local interbank telecom system or SEPAM to connect with 106 banks using Russia's system for transfer of financial messages or SPFS.

On Saturday, a senior Iranian trade official said Russia has overtaken China as the biggest investor in Iran.

Ali Fekri, head of the state-run Organization for Investment and Economic and Technical Assistance of Iran, said Russia had spent some $2.7 billion on two oil projects in the western province of Ilam since President Ebrahim Raeisi’s government came to office in August 2021.

The United Arab Emirates, Afghanistan, Turkey and China were the next biggest investors, added.  

Iran and Russia have strengthened ties significantly since last year. There have been several high-ranking visits and a raft of agreements to expand trade cooperation between the two countries.

Iran and Russia are both heavily sanctioned by the US and Europeans and have been working together to find ways to bypass the coercive measures.

Fekri said Russia has invested by either sending physical cash to Iran or by using foreign currency traders.

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