Sanctions won't affect Iran bank in Malaysia, says official

US sanctions on the Malaysian unit of Iran's Bank Mellat will not affect its operation here, officials at Malaysia's offshore banking authority said Friday.

The US Treasury Department Thursday announced sanctions against First East Export Bank PLC, saying it helped finance the proliferation of weapons of mass destruction by facilitating "the movement of millions of dollars for Iran's nuclear programme."

But a senior official at the Labuan Offshore Financial Services Authority (LOFSA) told AFP: "The US sanctions do not affect the subsidiary's operations in Labuan."

Speaking on condition of anonymity, the official said the sanctions would only affect the subsidiary's business with the US.

He said LOFSA ensures that the Labuan International Business and Financial Centre (IBFC), where the First East Export Bank is located, caters to "legitimate and sound businesses."

"The IBFC is well-regulated and its prudent practices are on par with international standards," he said.

"We will continue to ensure that all companies in Labuan will comply with international regulatory requirements and will take forceful action against non-compliance."

US officials in 2008 imposed sanctions on three Iranian banks, including Bank Mellat, accusing them of financing weapons proliferation.

Last month, Britain ordered financial companies to stop trading with Bank Mellat amid alleged nuclear links as western powers suspect Iran is trying to build an atomic bomb, a charge Tehran denies.