US Treasury acts against Iranian bank

WASHINGTON, Sep 8 (Reuters) The US Treasury Department has cut off Iranian state-owned Bank Saderat from any dealings with the US financial system to block it from financing terror groups, a top Treasury official said today.

Stuart Levey, the Treasury's under secretary for terrorism and financial intelligence, made the announcement in prepared remarks for delivery to a luncheon at the American Enterprise Institute, a conservative think-tank.

Levey, who is heading to Europe this weekend for talks on tightening measures to limit Iran's access to the global financial system, said that ''terrorism looms large'' five years after the September 11, 2001 attacks and the world must be wary.

He noted that Iranian financial institutions already are barred from direct access to the US financial system, but have been able to make transactions indirectly through third-country banks.

''Today, we have cut off one of the largest Iranian state-owned banks, Bank Saderat, from the US financial system,'' Levey announced. ''Here is why: this bank, which has approximately 3,400 branch offices, is used by the government of Iran to transfer money to terrorist organisations.'' He charged that Iran used Saderat to transfer money to Hizbollah and Hamas as well as other groups including the Palestinian Islamic Jihad.

''We will no longer allow a bank like Saderat to do business in the American financial system, even indirectly,'' Levey said.

The move by the US Treasury comes as the Bush administration is encountering some difficulty persuading allies to move ahead with United Nations sanctions against Iran for its nuclear program.

The United States has made the point that it intends to keep pressure on Iran, no matter what the UN does.

Levey also said it was important for governments and the private sector to take whatever measures were necessary to stop Iran from advancing ''dangerous policies'' in future.

''The next steps may involve sacrifice, but I think that people are beginning to recognize that the costs we face now pale in comparison to those we might face in the future if Iran does not change course,'' Levey said.

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