The financial messaging service for most international money transfers has told U.S. officials it is prepared to cut off Iran's central bank, according to people involved in the talks, an action that would be a blow to Iran's already battered economy.

The Society for Worldwide Interbank Financial Telecommunication, known as Swift, dispatched its top lawyer to Washington for discussions this week in response to proposed U.S. legislation targeting Swift and its board, whose chairman is Yawar Shah of Citigroup Inc. and deputy chairman is Stephan Zimmermann of UBS AG.

Swift's general counsel Blanche Petre said the Belgium-based service is prepared to expel Iranian institutions sanctioned by the European Union as well as Iran's central bank, according to aides to U.S. lawmakers who met with Petre and spoke on condition of anonymity because of the sensitivity of the issue.