A top US envoy said Wednesday that Washington could penalise China's four biggest state banks if they were found doing business with an Iranian insurance firm in violation of US nuclear sanctions.

David Cohen, US Treasury under secretary for terrorism and financial intelligence, was in China to discuss measures to prevent Iran from obtaining financing for its nuclear weapons programme and means to spread its hardware.

His China trip followed a stop in Hong Kong, where he met with representatives of the four banks -- Bank of China, China Construction Bank, Industrial and Commercial Bank of China and the Agricultural Bank of China.

Speaking to journalists Wednesday, Cohen said he told the banks that if they accepted payment from Moallem, an Iranian insurer, they could be cut off from the US financial system under a 2010 US law promoting tighter sanctions on Iran.

Moallem insures Irans national bulk container carrier, the Islamic Republic of Iran Shipping Lines (IRISL), a company with three subsidiaries, in violation of United Nations Security Council resolutions.

Both Moallem and IRISL have been designated as violators of anti-nuclear proliferation rules set by the United States and the European Union.

Many European countries no longer do business with IRISL and have closed their ports to its ships, but the vessels still make calls in Asia, Cohen said.

In January, the US Treasury identified several Hong Kong-based shipping companies as having strong links with IRISL.

Cohen also met with 20 financial institutions, local port authorities and shipping companies in Hong Kong to encourage them not to deal with IRISL or Mohallem.

"Any foreign bank that receives payment from Moallem on behalf of a client risks losing its ability to do business in the United States," he said.

In Beijing, meanwhile, Cohen held talks with officials from China's Ministry of Finance, Ministry of Foreign Affairs and ruling Communist Party in two days of meetings.

Hong Lei, a spokesman for China's foreign ministry, said Wednesday none of China's business with Iran violated UN resolutions.

"As a permanent member of the Security Council, China always implements UN Security Council resolutions," he said.

The United States and other world powers accuse Iran of seeking to acquire a nuclear weapons capacity under the guise of its civilian atomic work, a charge Tehran strongly denies.

Iran is under five sets of UN Security Council sanctions, as well as US ones, over its nuclear programme.

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