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U.S. moves against a big bank in Iran

Bank Sepah is accused of sending missile payments to North Korea, and it can no long conduct business in U.S. dollars.

By Washington Post
Published January 10, 2007

WASHINGTON - The Bush administration on Tuesday barred Iran's oldest bank from doing any future business in the United States, accusing the institution of transferring Iranian missile payments to North Korea.

The move will prevent Bank Sepah, Iran's fifth-largest bank, from conducting business in U.S. dollars and is part of a larger White House plan, put in place last year, to cut off Iran's access to U.S. and European currencies. Though U.S. officials say the effort is aimed at the Tehran government, it is also likely to affect millions of Iranian citizens who conduct personal business in U.S. dollars and who travel overseas.

Bank Sepah has nearly 300 branches in Tehran plus offices in Paris, Rome, London and Frankfurt, Germany. U.S. law has long prohibited Iranian government institutions from doing business in the United States, but Tuesday's move now bars Sepah from converting international transactions into dollars by routing them through New York banks.

"The only business Sepah could do before today in the United States was U-turn transactions," said Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence. "They would send it from a European office through a New York bank and then back to Iran. "

Tuesday's move, however, will not affect the bank's huge interests in Europe. The Bush administration had tried for months to persuade European allies to take similar steps against Iranian institutions and had hoped that a recent U.N. resolution would encourage the allies to do so.

In December, the U.N. Security Council ordered countries to stop supplying Iran with materials that could contribute to its nuclear and missile programs.

Levey said Bank Sepah has handled millions of dollars of transactions for Iran's Aerospace Industries, passing money from Tehran to North Korea, from which it obtains missile technology.

Last year, the United States took similar action against Iran's Bank Saderat, citing its alleged involvement in financing terrorism.

[Last modified January 10, 2007, 01:20:32]