US to block foreign banks defying Iran sanctions

February 29, 2012 17:10

WASHINGTON - The US Treasury warned foreign banks on Wednesday they could now be blocked from the country's financial system if they continued to deal with Iran's central bank for their non-oil transactions.

Starting Wednesday those banks "risk losing their correspondent account access to US financial institutions," David Cohen, Treasury's undersecretary for terrorism and financial intelligence, said in remarks prepared for a securities conference.

The first phase of sanctions designed to stop Iran from acquiring nuclear weapons only applies to foreign banks that engage in "significant" transactions unrelated to the purchase of oil. Those sanctions could ensnare companies and manufacturers that sell Iran items such as cars and computers.

"Whatever bank they were using to handle the financial part of that transaction will have to think twice about using that bank for that transaction," said Jeanne Archibald, a former Treasury general counsel.

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