By Mary Beth Sheridan

Source:

August 13, 2010

New penalties kicked in Friday against foreign banks doing business with institutions that Washington has designated as supporting Iran’s nuclear program or terrorist activities.

The penalties are part of the signed into law last month by President Obama.

Much of the debate on those sanctions focused on how they would limit the sale of refined petroleum to Iran. But the law also cracks down on foreign banks that provide financial services to Iran’s Revolutionary Guards Corps, or any related companies. The corps is deeply involved in Iran’s missile and nuclear programs.

“I’ve already had financial institutions reach out to me to say they’ve read the statute. And they are immediately adjusting to ensure they are not engaged in any transactions” that violate the law, Treasury Undersecretary Stuart Levey told reporters Friday.

The new measure increases the risk that such foreign financial institutions could be denied access to U.S. banks, making it difficult for them to do business in dollars.

Levey said the financial penalties had a ripple effect.

“As financial services become less and less available [for Iranian transactions], we’re starting to see other commerce that depends on that making adjustments as well,” he said.

Levey was scheduled to leave Friday night on a trip to Lebanon, Bahrain and the United Arab Emirates to explain the new regulations.

Iran says its nuclear program is aimed at producing energy, but the United States and other countries suspect it is developing a bomb.