Banks in Iran and Russia are now able to bypass the SWIFT messaging system and conduct letter of credit (L/C) and other trade operations over two interconnected national platforms they have established according to an official at the Central Bank of Iran (CBI).

Iran and Russia have been banned from SWIFT since 2018 and 2022, respectively because of international sanctions due to the US withdrawal from the Iran nuclear deal and Russia's invasion of Ukraine.

Banks already connected

The deputy governor of international affairs of at the CBI, Mohsen Karimi, says that 56 banks in Iran are connected to the SEPAM platform, the inter-bank messaging system in Iran that would allow the Islamic republic to bypass the SWIFT system. Of the banks based in Iran, Karimi says 52 of these are Iranian and four are foreign financial institutions.

Russian banks have a similar system to bypass SWIFT known as the SPFS platform which is compatible with SEPAM. The deputy governor says 106 Russian banks are connected to the SPFS system.

More banks are expected to join the platforms in the near future according to Karimi.

L/C capabilities

Russian majority state-owned VTB Bank and Iranian public joint stock Bank Shahr were selected for the pilot stage.

The SEPAM system can accommodate rial and foreign exchange L/Cs, bank guarantees, foreign exchange remittances, correspondence, inquiries and negotiations on a single platform.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.