Undersecretary of the Treasury Stuart Levey said new U.N. sanctions, coupled with unilateral measures proposed by the United States, the European Union and others, were effectively cutting Iran off from the global economy as companies join governments in shunning the Islamic republic.
"Virtually all major financial institutions have either completely cut off or dramatically reduced their ties with Iran," Levey told a hearing of the Senate Foreign Relations Committee.
"We are now starting to see companies across a range of sectors, including insurance, consulting, energy, and manufacturing make similar decisions," Levey said.
"The private sector really is getting the point that if they do business with Iran, they put themselves at enormous risk."
Levey said the United States would seek strict enforcement of the new measures, which include new U.N. Security Council sanctions passed this month along with even stronger measures being considered by the U.S. Congress.
Undersecretary of State William Burns said the proposed U.S. legislation, which would target foreign banks and gasoline suppliers with ties to Iran, could help to pressure the private sector — although he repeated that the government would like the authority to waive the sanctions if necessary.
"We want to work with you to help shape that legislation so that it amplifies the impact of the international coalition that we've built," Burns told the same committee.
U.S. officials are eager to show that the strategy of tightening the economic screws on Iran will work despite doubts over the overall effectiveness of targeted sanctions.
Levey said Iran's leaders were clearly anxious about the new sanctions and could be expected to step up efforts to work around the bans with tools such as front companies, doctored wire transfers and falsified manifests.