Israel Matzav

US cutting off Iranian banks

The Bush administration is not waiting for the UN. A Washington Post report today indicates that the United States is moving to cut off Iranian banks from having contact with the US banking system. Of course, this is being done to cut off Iran's ability to finance terrorists and acquire weapons technology.

The initiative has gathered steam in recent weeks, even as the U.S.-led effort to bring sanctions against Iran for its nuclear activities has slowed at the U.N. Security Council. Officials have especially focused on Iran's financing of the radical Shiite militant group Hezbollah in the aftermath of Israel's war with Hezbollah in southern Lebanon this summer.

The Treasury Department said yesterday it had cut off one of Iran's largest state-owned banks from the U.S. financial system, accusing Bank Saderat of funneling $50 million to a Hezbollah-controlled firm since 2001. The bank -- which has about 3,400 branch offices across the Middle East and elsewhere -- has also been used by Iran to transfer money to Hamas, the Popular Front for the Liberation of Palestine-General Command and Palestinian Islamic Jihad, the Treasury Department said.

Iranian banks are already barred from doing business directly with U.S. banks, but U.S. banks are permitted to process payments involving Iran that begin and end with a non-Iranian foreign bank, in what are called "U-turn" transactions. Treasury's action will end such indirect access for Bank Saderat.

On Thursday, Treasury separately targeted two Lebanon-based financial institutions that officials said acted as Hezbollah's unofficial treasury, helping secure loans and finance business deals for the organization, among other things.

Stuart Levey, the Treasury undersecretary for terrorism and financial intelligence, said he will go to Europe next week to enlist support from governments and financial institutions for severing Iran from the international financial system. Other Treasury and State Department officials are traveling across Asia and the Middle East to make similar pitches.

posted by Carl in Jerusalem @ 10:13 PM