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Wednesday, January 10, 2007

US bans, freezes assets of Iranian bank

The US government stepped up efforts Tuesday to disrupt financing of Iran's nuclear weapons program, banning its fifth-largest state-owned bank from using the American financial system or banks and freezing its assets in the US

The designation of Bank Sepah as a supporter of WMD proliferation comes on the heels of the UN Security Council's decision to apply sanctions to curb Iran's nuclear program. It follows a similar action against Iran's Bank Saderat in September and helps create a climate in which investors are dissuaded from doing business with Iran, according to the US Treasury Department.

"Financial institutions and other companies have begun to re-evaluate their business relationships with Iran. Many leading financial institutions have either scaled back dramatically or terminated entirely their Iran-related business," said Stuart Levey, the treasury's under secretary for terrorism and financial intelligence, at a press conference Tuesday.

"They have done so of their own accord, many concluding that they did not wish to be the banker for a regime that funds terrorism, defies the UN security council in pursuing a nuclear program and deliberately conceals the nature of its business."

He also pointed to activities such as the sponsoring of a conference questioning the Holocaust, saying, "These things all start to add together and are leading to increasing isolation of Iran from the legitimate business community that it needs for its future."

Patrick Clawson, deputy director for research for the Washington Institute for Near East Policy, said the treasury action against Bank Sepah opens a new arena of concern for banks, which will now have to avoid complicity in WMD proliferation, not just terrorism.

The latter policy, pursued by the Bush administration in earnest over the last two years with the appointment of Levey, "has been quite successful in saying to banks, do you really want to get involved in this," noted Clawson, implying the answer from banks was overwhelmingly no. "The banks don't want to acquire reputations for being 'criminal banks.'"

The block on Sepah forbids American citizens from handing any direct or indirect transactions involving the bank, which the US accuses of financing the Iranian Aerospace Industries Organization (AIO), which oversees all of Iran's missile industries and manages the country's missile program.

"Bank Sepah is the financial linchpin of Iran's missile procurement network and has actively assisted Iran's pursuit of missiles capable of carrying weapons of mass destruction," Levey said. "It's very important that they don't have the means of delivery."

He said that the move was taken under the authority of an executive order and was discussed with European allies, including Italy, since the Rome Bank Sepah branch was involved in a large number of AIO transactions.

Levey said the treasury's investigation of the Iranian bank also revealed shady practices including attempts to conceal its name from a party to international business and links with North Korea.

While North Korea has been easier to isolate economically because of its small size, Levey said Iran is vulnerable because it has "a much greater integration into the international financial system."

In Teheran, Reuters reported that Iran's chief nuclear negotiator, Ali Larijani, told Iran's Student News Agency, "This is not the first time that such measures of America take place and the bank harassments of America have happened in some cases. However, these are not issues that can affect Iran's will."

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