In several rounds of sanctions, the latest in January, the EU froze assets of 116 people and 442 firms and utilities, including the Iranian central bank.
The measures are part of global efforts to force Tehran to abandon a nuclear programme feared to have military aims — a claim rejected by Tehran.
A statement Thursday said the EU had “agreed that no specialised financial messaging shall be provided to those persons and entities subject to an asset freeze.”
An EU official who asked not to be identified said the decision, which was adopted after written approval from the 27 nations, would mainly affect payments through SWIFT, the world’s biggest inter-bank transfer network.
In a statement, Belgium-based SWIFT confirmed it had been instructed to discontinue communications services to Iranian financial institutions which are subject to European sanctions.
“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,” said its CEO, Lazaro Campos.
The cut in services will take effect Saturday, March 17 at 1600 GMT, the company said.
SWIFT is a member-owned cooperative that enables over 10,000 financial institutions and corporations in 210 countries to connect.
The United States, with along with the EU has been at the forefront of tightening sanctions on Tehran, welcomed the measure.
US Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen said “today’s action reinforces the isolation of designated Iranian banks from the international financial sector.”
The EU official meanwhile said talks were continuing to draft a regulation setting out details on an decision in February to slap an embargo on Iranian oil.
“It will take a few more weeks” to finalise the regulation, the source said.
After lengthy and fraught talks, EU ministers in February agreed a ban on oil imports with a gradual phase-out of existing contracts between now and July 1.
Earlier this month, global powers offered to resume long-stalled nuclear talks with Tehran amid mounting tension between Israel and Iran.
The talks are led by EU foreign policy chief Catherine Ashton on behalf of China, France, Germany, Russia, Britain and the United States.
A time and venue are still being discussed with EU diplomats hoping for progress in coming weeks.
