Obama signs bill on banking sanctions against Iran

LOS ANGELES -- US President Barack Obama signed on Saturday a wide-ranging defense funding bill in Honolulu, Hawaii, calling for new sanctions against financial institutions doing business with Iran's state banking institutions.

The bill, approved by Congress last week, aims at reducing Tehran's oil revenues but gives the US president powers to waive penalties as required.

Obama singed the bill into law although he has "serious reservations" about provisions regarding counter-terrorism efforts, including clauses that regulate the detention, interrogation and prosecution of suspected terrorists.

"The fact that I support this bill as a whole does not mean I agree with everything in it," Obama said in a prepared statement accompanying his signature in Hawaii, where he is having a family holiday.

According to an amendment contained in the sweeping bill, foreign financial institutions doing business with Iran's central bank are banned from opening or maintaining correspondent operations in the US.

The ban only applies to foreign central banks for transactions that involve the sale or purchase of petroleum or petroleum products. The penalties do not go into effect for six months, according to the bill.

However, Obama can waive the penalties for national security reasons. If the country with jurisdiction over the foreign financial institution has significantly reduced its purchases of Iran oil, Obama can also waive the measures, the bill stipulates.

US officials said Washington was engaging with its foreign partners to ensure the sanctions can work without harming global energy markets.

They also noted that the bill does not change US strategy for engaging with Iran. Washington seeks to ratchet up pressure on Iran without disrupting interests of the US and its allies.