In a move to curb what US officials allege to be Iran's support for terrorism, the US Department of the Treasury has announced that Iran's Bank Saderat is being cut off from all access to the US financial system, direct or indirect.

In prepared remarks related to the 8 September decision, US under secretary for terrorism and financial intelligence, Stuart Levey, said the measure comes in the wake of decisions by some foreign banks to reduce their letter of credit (L/C) business with Iranian banks.

Terrorist funding

In his remarks before the American Enterprise Institute for Public Policy Research, Levey said "Bank Saderat facilitates Iran's transfer of hundreds of millions of dollars to Hizballah and other terrorist organisations each year."

"We will no longer allow a bank like Saderat to do business in the American financial system, even indirectly," he added.

Reassessing relationships

Levey told the AEI that private institutions - particularly those in the financial community - are already reassessing their relationships with Iran.

The undersecretary reckons this is because of those institutions' view of Iranian business partners but other institutions are believed to have reassessed their view of business with Iran because of the widely trailed possibility of US sanctions on Iranian entities.

L/Cs refused

"Earlier this year, the Swiss bank UBS cut off all dealings with Iran. HSBC and Credit Suisse have also limited their exposure to Iranian business," said Levey who maintains that "these were business decisions, pure and simple - handling Iran's accounts was no longer good business."

"As further evidence of the change in tide, a number of foreign banks are refusing to issue new L/Cs to Iranian businesses," he added.

Terrorist organisations

Levey alleges that the Iranian government has used Bank Saderat, one of the largest Iranian-owned banks, to transfer money to terrorist organisations.

These include Hamas, the Popular Front for the Liberation of Palestine-General Command and Palestinian Islamic Jihad as well as Hizballah, he says.

Earlier threats

Earlier this year it was reported that the US was threatening foreign banks with fines and lost businesses if they continued their operations in Iran in a bid to squeeze the Iranian regime (DC World News, 14 June 2006).

The reason given at the time for the US campaign was Tehran's refusal to abandon its uranium enrichment programme.

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