Washington is ready to impose sanctions against the European financial settlement (INSTEX) mechanism, which would allow trade to continue between the EU and Iran, US Special Representative to Iran Brian Hook warned on Thursday.

The financial channel, which was announced by Germany, France and the UK in January, is aimed to enable “legitimate trade” with Iran in the wake of US sanctions against the Islamic Republic.

“If this mechanism starts working … We are ready to impose sanctions on any activity subject to restrictions,” Hook said during a telephone briefing.

The US representative voiced doubts that Tehran would be able to build a “mirror mechanism” to ensure transactions from its side. Washington doesn’t see any demand from businesses for incorporation into such a mechanism, Hook noted.

Bloomberg had reported earlier that the US Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that INSTEX and anyone associated with it could be barred from the US financial system, if it goes into effect.

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