WASHINGTON, Sept 7 (Reuters) - The U.S. Treasury Department on Tuesday said it designated an Iranian-owned bank in Germany as facilitating Iran's efforts to develop nuclear weapons, a move that effectively prevents the firm from doing business with international financial institutions.
The European-Iranian Trade Bank AG, called EIH Bank in Germany, has facilitated billions of dollars of transactions with Iranian banks that the United States and European Union have blacklisted for aiding Iran's nuclear or missile programs.
"EIH has acted as a key financial lifeline for Iran," Under Secretary for Terrorism and Financial Intelligence Stuart Levey said in a statement.
"As international sanctions tighten, Iran will find it increasingly difficult to find banks like EIH that will cooperate with it," he added.
The move by the Treasury Department will make it illegal for any U.S. entity to do business with Hamburg-based EIH or with any firm that does business with the targeted bank. That effectively shuts out EIH from transactions with other financial institutions, as even foreign banks have largely obeyed U.S. sanctions on Iran.
The Treasury said that EIH was the first financial institution targeted for facilitating Iran's weapons activities under a new law enacted this year. Under the law's regulations, the United States may impose strict limits on foreign financial institutions' access to the U.S. banking system for facilitating transactions with an entity already under sanctions for weapons proliferation or support of terrorism.
The U.S. Treasury said that EIH was one of the few remaining European banks that actively engaged in business with Iranian banks. The Treasury said it took the action after consulting with the German government, which is also taking steps to curb EIH. (Reporting by Donna Smith; Editing by Kenneth Barry)