The Bush administration, stepping up pressure on Tehran, moved Friday to sever a big Iranian state-owned bank from the US financial system.
Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence, said the government's action was against Bank Saderat, which the United States contends is used by Iran to transfer money to terrorist groups, including Hizbullah.
While Iranian financial institutions are barred from directly accessing the US financial system, they are permitted to do so indirectly through banks in other countries. The United States is closing down that avenue for Bank Saderat. The action, which involved a change in regulations, doesn't apply to other Iranian banks, another Treasury official said.
It marked the first time Treasury had resorted to a regulatory change of this kind to sever a bank, the official said.