The United States is using its own financial regulations to cut off both the Democratic People's Republic of Korea (DPRK) and Iran from the international financial system, the New York Times reported yesterday.

Over the last year, U.S. officials have met with many private banks overseas to warn them of the risk of doing business with Iranian and DPRK trading companies which Washington says have been tied to what it believes are terrorist groups or to the spread of nuclear materials.

As a result of the campaign, banking officials and experts say that some foreign banks are cutting off ties with the DPRK and Iran.

However, while achieving some unilateral success in economically punishing the DPRK and Iran, some experts say the move against Iran, at least, could damage U.S. economic interests if that country switched to other currencies than the dollar for its large oil transactions.

The ban on U.S. transactions with the Iranian bank, Bank Saderat, means that it will no longer be able to obtain U.S. dollars for its dealings with any other bank in the world, the New York Times said.

Bank Saderat, one of Iran's half-dozen largest banks, was accused by Washington of having ties with terrorist groups.

Many U.S. banking officials predict that, in coming months, the United States will ban its banks from conducting transactions with other leading banks in Iran.

That is due to a wide-spread assumption among bankers that all of Iran's state-owned banks engage in the same activities as Bank Saderat.

The likely result is that Iran will have difficulty selling its oil for dollars, the international medium of exchange for all oil sales.

"This is a pretty dramatic (increase) of pressure from the United States," said Judith A. Lee, a law partner specializing in economic sanctions at Gibson, Dunn & Crutcher in Washington.

"It is going to create significant difficulties for European banks and European countries."

U.S. officials declined to say whether the move against Bank Saderat would apply to other Iranian banks.