US to name Iran area of 'money laundering concern'

The decision was reported earlier by ABC News and the Wall Street Journal. The newspaper said the Treasury would not formally sanction Iran's central bank, in part to avoid causing a sudden shock to oil prices.

Under Section 311 of the Patriot Act, such a designation allows the United States to take a range of "special measures" against a jurisdiction as a whole, an institution, a class of transactions or a type of account.

It was unclear what exact steps the Treasury planned for Iran but it seemed unlikely it would seek to cut off the Iranian financial sector entirely, a move that could disrupt the global energy markets and harm the U.S. economic recovery.

The decision - which the official said was to be announced by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner today- appeared designed as a warning about the risks of dealing with Iran's financial institutions.

It follows a November 8 report by the UN nuclear watchdog that presented intelligence suggesting that Iran had worked on designing an atomic bomb and may still be secretly carrying out related research.

That report, calls by US lawmakers to sanction Iran's central bank and media speculation of a possible Israeli strike against Iran's nuclear sites have all pushed the Obama administration to look for tougher sanctions against Tehran.

The Obama administration suspects that Iran is pursuing a nuclear weapons capability under cover of its civilian atomic energy program. Tehran denies this, saying it has no interest in nuclear arms and its atomic program is purely peaceful.

The United States is also expected to unveil sanctions against Iran's petrochemical sector, sources familiar with the matter said on Friday, and European nations are expected to follow suit.