The United States on Friday asked foreign governments to submit detailed reports on humanitarian exports to Iran, a step observers said could have a chilling effect and cast a pall over European efforts to allow trade.
President Donald Trump's administration, which has cast Tehran's clerical regime as enemy number one, announced a new "humanitarian mechanism" which it said would help the Iranian people by facilitating "legitimate" trade.
As it announced the initiative, the Treasury Department also said it was blacklisting Iran on charges of money laundering under the 2001 Patriot Act, effectively forbidding all US transactions with Iranian banks.
The Trump administration has imposed sweeping sanctions on Tehran and officially makes exceptions for food, medicine and other humanitarian goods, but most companies are unwilling to do any trade with Iran for fear of repercussions in the world's largest economy.
US officials said the new mechanism will allow foreign governments and banks to reduce their risks by showing their transactions to Washington, which would certify they are in compliance with sanctions.
"A new humanitarian channel will make it easier for foreign governments, financial institutions and private companies to engage in legitimate humanitarian trade on behalf of the Iranian people while reducing the risk that money ends up in the wrong hands," Brian Hook, the State Department point man on Iran, said in a statement.
Treasury Secretary Steven Mnuchin said the Trump administration "remains committed to the unfettered flow of humanitarian aid to the Iranian people."
To seek certification, each institution will need to submit "substantial and unprecedented" information on a monthly basis, including all invoices and details on their customers -- including whether they appeared on any US, EU or UN blacklists in the previous five years.
Brian O'Toole, a senior Treasury Department adviser dealing with sanctions under former president Barack Obama, said the measure looked like it was aimed more at gathering intelligence than helping ordinary Iranians and expected many foreign banks would be unable to provide the level of detail required.
"I think this is going to have a chilling effect. It will have the exact opposite effect of what they're claiming it will," said O'Toole, now a senior fellow at the Atlantic Council think tank.
O'Toole, the former Treasury adviser, said that the measure also looked like it was aimed at countering INSTEX, a channel set up by European powers to skirt unilateral US sanctions.
"This is clearly saying -- okay, we told you INSTEX is bad, this is what you should use, never mind the invasion of US government sovereignty on you," he said.
European powers have been seeking to salvage a multinational 2015 nuclear accord with Iran, from which Trump withdrew last year.
Through INSTEX, European businesses are supposed to be insulated from US sanctions, although in reality few companies are willing to take the risk.
The Trump administration has tried to stop all oil sales by Iran and strangle its economy in a bid to reduce the clerical regime's support for proxies in the Middle East that fight US allies Saudi Arabia and Israel.