Washington sanctions Iran's banks 'to stop illicit access to US dollars'

The United States has slapped fresh sanctions on Iran's financial sector, targeting 18 Iranian banks in an effort to further shut Iran out of the global banking system as Washington ramps up pressure on Tehran weeks ahead of the US election.

However, the US Treasury Department said in a statement that the prohibitions did not apply to transactions for the provision of agricultural commodities, food, medicine or medical devices to Iran.

Treasury Secretary Steven Mnuchin said that the action would "stop illicit access to US dollars."

"Our sanctions programmes will continue until Iran stops its support of terrorist activities and ends its nuclear programs," he said in a statement.

Iranian Foreign Minister Mohammad Javad Zarif accused the United States of targeting Iran's "remaining channels to pay for food and medicine" in the midst of the pandemic.

"Amid Covid 19 pandemic, US regime wants to blow up our remaining channels to pay for food & medicine," Zarif said on Twitter. "But conspiring to starve a population is a crime against humanity."

Iranian Central Bank governor Abdolnaser Hemmati dismissed the new sanctions as propaganda linked to US domestic politics.

"Rather than having any economic effect, the American move is for US domestic propaganda and political purposes, and shows the falsity of the human rights and humanitarian claims of US leaders," Hemmati said in a statement posted on the central bank's website.

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Major banks targeted

Washington's move affected what the Treasury said were 18 major Iranian banks, most of which were targeted under US Executive Order 13902, which allows the Treasury Department to target entire sectors of the Iranian economy.

It named them as Amin Investment Bank, Bank Keshavarzi Iran, Bank Maskan, Bank Refah Kargaran, Bank-e Shahr, Eghtesad Novin Bank, Gharzolhasaneh Resalat Bank, Hekmat Iranian Bank, Iran Zamin Bank, Karafarin Bank, Khavarmianeh Bank, Mehr Iran Credit Union Bank, Pasargad Bank, Saman Bank, Sarmayeh Bank, Tosee Taavon Bank, Tourism Bank and Islamic Regional Cooperation Bank.

While experts have said such a US step could erode Iran's ability to secure humanitarian goods by making foreign banks even more reluctant to facilitate such transactions, the Treasury stressed that the action under Executive Order 13902 does not affect existing authorisations for humanitarian trade, which remain in force.

READ MORE: Three EU nations say Iran sanctions relief to continue beyond September 20

Tensions steadily rise

Tensions between Washington and Tehran have soared since US President Donald Trump unilaterally withdrew in 2018 from the 2015 Iran nuclear deal struck by his predecessor and began reimposing US sanctions that had been eased under the accord.

The sanctions Trump has reinstated target everything from oil sales to shipping and financial activities, and while they exempt food, medicine and other humanitarian supplies, many foreign banks are already deterred from doing business with the Islamic Republic - including for humanitarian deals.

Thursday's move freezes any US assets of those blacklisted and generally bars Americans from doing business with them. 

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