Under orders from the EU, Swift has taken the unprecedented step of cutting off its financial messaging network to Iranian banks subject to European sanctions.
A new European Council decision prohibits entities such as Swift providing "specialised financial messaging services" to EU-sanctioned Iranian banks.
In a statement, the EU says: "The Council today developed the application of the EU's restrictive measures against Iran, which include asset freezes on persons and entities associated with Iran's nuclear activities. In this context, the Council agreed that no specialised financial messaging shall be provided to those persons and entities subject to an asset freeze."
The affected banks have been notified of the disconnection, which will become effective on Saturday.
Lázaro Campos, CEO, Swift, says: "This EU decision forces Swift to take action. 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."
Previously, Swift had described any decision to turn off the tap to Iran as "a complex situation that needs to take into consideration the implications to the functioning of the global payments system as well as to the continued flow of humanitarian payments to the Iranian people".
Incorporated under Belgian law, the body has no choice but to now comply with the European decision as confirmed by its home country government, says the latest statement.
Europe and the US have been manoeuvring to tighten sanctions against Iran as part of a strategy to cut off the supply of funds for the country's nuclear energy programme.
In 2010, 19 Iranian banks and 25 Iranian entities reportedly used Swift more than two million times, transacting $35 billion in trade with Europe alone.
Last month US politicians proposed a bill that would block Iranian banks from using the Swift network. At the time Swift said that it complies with "all applicable sanctions laws of the multiple jurisdictions in which we operate".
David Cohen, treasury under secretary for terrorism and financial intelligence, has welcomed the latest development, saying: "Today's decision reflects the growing international consensus that substantially increased pressure is needed to convince the Iranian regime to address the international community's concerns about its illicit nuclear activities."