The sanctions mean any assets held by the bank under US jurisdiction are frozen and US citizens are barred from dealing with the institution.

"Iran has adopted a strategy of using less prominent institutions, such as the Export Development Bank of Iran, to handle its illicit transactions," the Treasury's under secretary for terrorism and financial intelligence, Stuart Levey, said in a statement.

Sanctions will also affect three companies controlled by EDBI, namely EDBI Stock Brokerage Company and EDBI Exchange Company, based in Tehran, as well as Banco Internacional de Desarollo, based in Caracas.

The US accuses Iran of using its nuclear program as a cover to build nuclear arms. But Tehran insists its program is strictly peaceful and solely aimed at generating electricity.

EDBI was established in 1991 with the objective of increasing Iran's exports and developing trade with other countries, according to its website.

The Treasury said EDBI was "providing or attempting to provide financial services to Iran's ministry of defense and armed forces logistics."