Paulson says Iranian banks engage in deception

By David Lawder

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson on Wednesday accused Iranian banks of deception and said the U.S. Treasury was pressuring foreign banks dealing with Tehran to respect United Nations sanctions.

"We see all kinds of deceptive practices by Iranian banks, so we have been quite aggressive in terms of singling out different Iranian banks for sanctions," he told a House of Representatives Appropriations subcommittee.

The United Nations imposed new sanctions on Iran on Monday for refusing to suspend uranium enrichment, which Washington and its allies claim is a step toward building a nuclear bomb.

"They use Iranian, state-owned banks to engage in their weapons proliferation, acquisition of missile systems, they're continuing to enrich nuclear fuel," Paulson said.

The latest U.N. sanctions increase the number of individuals and firms on a travel and asset-freeze blacklist, and call for vigilance over Iranian bank and shipping firms. These include several of Iran's top state-owned banks, including its largest, Bank Melli.

Paulson said the Treasury was "all over this" in terms of policing the U.N. rules.

"We're continuing to work in every country where there are banks that have business. But remember, all business with Iran is not illegal under these sanctions. It is business with the sanctioned entities, so we're pointing out the risks."

Later on Wednesday, 26 Democratic senators made public a letter to President George W. Bush urging that the United States designate Iran's central bank, Bank Markazi, a supporter of terrorism and a weapons proliferator to clear the way for imposing sanctions against it.