What is SWIFT? And Why Does Iraq Have an Issue with SWIFT?
Iraq is in trouble with the U.S. Treasury Department, and after reading this article or watching the video, you will understand why Iraq has made the decisions it has made. You may also be upset about your own personal finances being recorded.
To understand Iraq's decision to withdraw from using SWIFT, we must first comprehend the extent of SWIFT's intrusiveness. Every time one bank sends money to another bank, even if both banks are located within the United States, the transaction still utilizes the SWIFT system. It’s not just for international transfers. SWIFT is like the language banks use to talk to each other safely and clearly. So if you transfer money from your Bank of America account to someone’s Chase account, that message travels through SWIFT. It’s behind the scenes, but it’s always working to connect banks and ensure that the money goes where it’s supposed to. That’s how powerful and deeply connected SWIFT is in the global financial system—even for local transfers within the United States.
SWIFT knows everything about our personal finances.
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It’s a secure system that banks use to send money and messages to each other. Think of it as a global messaging app, but specifically designed for banks. It helps banks talk safely when sending money across countries. SWIFT doesn’t move the money itself, but it tells banks where and how to send it. Almost every country in the world uses SWIFT. It helps stop fraud and keeps track of where money is going.
Iraq has not yet fully implemented the SWIFT system across all its banks. Some of Iraq’s banks still use outdated or unofficial methods to transfer money. This makes it harder for other countries to trust the actions of those banks.
The U.S. Treasury is upset because some of Iraq’s money transfers have been linked to Iran and other groups under U.S. sanctions. Without full SWIFT use, Iraq’s banking system seems risky and unclear. That’s why the U.S. has stepped in and even warned Iraq it could face financial punishments. Using SWIFT would help Iraq be more transparent and trusted in the global banking system.
Iraq is officially part of the SWIFT banking system and has completed the necessary paperwork to be a member. But in reality, Iraq has been slow or even reluctant to fully implement SWIFT across its banking sector.
One primary reason is privacy. SWIFT tracks every transaction, regardless of its size. Every dime is recorded, and every transfer can be traced. That level of transparency can make some countries nervous, especially those used to working in cash or through informal channels.
Another reason Iraq may have hesitated is that SWIFT is also a powerful political tool. The West and Europe used it to punish Russia by cutting it off from the system after the war in Ukraine started. Without access to SWIFT, Russian banks struggled to send or receive money internationally. Iraq sees this and knows that full SWIFT use gives the U.S. and Europe a lot of control.
So, even though Iraq is part of the system on paper, it hasn’t rushed to integrate it into everyday banking. But this choice has led to problems. The U.S. Treasury now questions some of Iraq’s money transfers and fears that some funds may be reaching groups or countries under U.S. sanctions. That’s why Iraq is under pressure—to either play by global banking rules or face serious consequences.
