The United States blacklisted two Dubai-based trading companies on Wednesday, accusing them of helping Iran evade financial sanctions and effectively cutting them off from the U.S. financial system.
The move against Al Hilal Exchange and Al Fida International General Trading is the latest in a series of sanctions Washington has imposed to pressure Tehran to curb its atomic program, which the United States suspects aims to develop weapons. Iran says the program is for civilian purposes.
Testifying before Congress, two senior Obama administration officials said they would continue to pursue Washington's dual-track policy of negotiating with Iran to rein in its nuclear program, while also imposing sanctions to pressure it.
In a statement, the U.S. Treasury said the two firms had provided financial services to Iran's Bank Mellat, a bank that has itself been blacklisted - or "designated" in U.S. government jargon - for involvement in the Iranian nuclear program.
"They have been used by Iran in an attempt to maintain access to foreign currency exchange," the Treasury Department said in a statement.
The Treasury's action bars U.S. individuals and companies from dealing with the two firms, effectively cutting them off from the U.S. financial system, and requires the freezing of any assets they may have under U.S. jurisdiction.
It also exposes them to possible criminal penalties, ranging up to 20 years in prison, $500,000 in fines for a corporation and $250,000 for an individual. In addition, civil penalties of up to $50,000 per violation may be imposed administratively.
A grouping of the five permanent members of the U.N. Security Council - Britain, China, France, Russia and the United States - along with Germany, have sought to negotiate a solution to the nuclear standoff.
At the most recent meeting in the Kazakh city of Almaty on April 5 and 6, the group tried to persuade Iran to give up its most sensitive uranium-enrichment work to allay concerns that it is seeking the means to make atom bombs.
Iranian officials did not accept the offer, which was coupled with a pledge of modest relief from economic sanctions, and the two sides failed to even agree to meet again, though Western diplomats say there are enough grounds to keep talking.
EU foreign policy chief Catherine Ashton, who represents the six world powers, and Iran's chief nuclear negotiator Saeed Jalili, were scheduled to meet over dinner on Wednesday in Istanbul to discuss the nuclear issue.
Little movement, however, is expected ahead of presidential elections to be held in Iran on June 14, in which Jalili himself is a candidate.
In written testimony delivered to Congress, U.S. Undersecretary of State Wendy Sherman said Iran's unelected Guardian Council were using "vague criteria" to eliminate potential candidates for the election. She also urged the authorities to hold a free, fair and transparent election.
Also testifying before Congress, U.S. Undersecretary of the Treasury David Cohen said the United States planned to continue to tighten sanctions on Iran, though he did not offer details.
"We are very much committed to enhancing sanctions pressure," Cohen said. "We are looking at a variety of different means to go after Iranian revenues, to lock down their reserves and to affect the value of the rial (currency)." (Reporting by Arshad Mohammed and Lesley Wroughton; Writing by Lesley Wroughton; Editing by Vicki Allen and David Brunnstrom)