US calls for G7 offensive on Iran 'terrorist' backing

SINGAPORE (AFP) - The United States sought to mobilize its Group of Seven partners in a campaign to stamp out what it said was Iran's financial backing for terrorists.

"Iran is ... quite actively involved in financing terrorists," US Treasury Secretary Henry Paulson told a press conference Saturday after a meeting with counterparts from Britain, Canada, France, Germany, Italy and Japan.

Paulson said the United States had evidence that some "blue-chip" banks had become inadvertently implicated in financing terrorism, and that US authorities were therefore engaged in an "educational" campaign so that banks can be "vigilant and identify risks."

But there were signs here that at least some of Washington's G7 allies were not prepared to sign on fully to the US effort.

Paulson said in a statement issued after the talks that G7 ministers and central bankers had "discussed the need to take action to disrupt terrorist and illicit finance related to specific threats from North Korea and Iran," but the official communique made no mention of either country.

The G7 said simply that "we agreed to intensify our efforts to combat money laundering, proliferation networks as well as terrorist and illicit financing by addressing global financial vulnerabilities, particularly those associated with jurisdictions that have failed to recognise international standards."

Japanese Finance Minister Sadakazu Tanigaki said the ministerial statement did not necessarily target Iran, in which several G7 participants such as Japan, France and Germany have major commercial interests.

"We are talking about these matters in general," he told reporters.

Paulson denied that any G7 country was "resistant" to the idea of educating banks about the risks of doing business with suspect companies from Iran or anywhere else.

The US Treasury Department this month froze Bank Saderat, one of Iran's largest lenders, from doing any business with US-owned banks on the grounds that it supports terrorism.

It has been waging a long-running campaign of financial sanctions against North Korea, which Washington accuses of forging dollars and laundering money to fund its weapons development.

Paulson said it was "crucial that we improve upon the safety, soundness and security of the international financial system" by combating terrorist financing, money laundering and networks supporting weapons proliferation.

He said that Iran had used more than 35 front companies to channel funds to extremist groups, identified by US officials as including the Lebanese Shiite militia Hezbollah and the Palestinian groups Hamas and Islamic Jihad.

Washington's financial offensive coincides with efforts by the United States and its European partners to push Iran into scrapping its uranium enrichment, which they suspect is being used to make nuclear weapons.

But US officials denied any link to the nuclear dispute, insisting that their clampdown on extremist financing was an ongoing priority.