(Persia Digest) - JPost writes that Germany's powerful central bank--Deutsche Bundesbank--passed on Wednesday a new financial policy that will effectively bar the transfer of nearly $400 million in cash to the Iranian regime.

The mass circulation daily BILD reported that the bank expanded its business conditions to include a section on "cash payment transfers" in order to reject financial transfers of partners of the Deutsche Bundesbank.

The BILD reported in July that Iran’s regime seeks to use the European-Iranian trade bank in the northern German city of Hamburg – with the approval of the German government – to transfer the nearly $400 million in cash to circumvent pending US sanctions.

Chancellor Angela Merkel's government--widely considered one of the most pro-Iran regime friendly European governments--has not commented on whether it will allow the roughly $400 million in cash to be sent to Iran to undercut the US sanctions campaign.

Israeli and US officials expressed deep concern that the cash payment to Iran would be used to finance terrorism. The US ambassador to Germany, Richard Grenell, urged the German government to block the payment to Iran's theocratic regime, one of the leading state-sponsors of terrorism, according to the US state department.

The Deutsche Bundesbank Bank is a member of the European System of Central Banks and it carries great influence within the EU because Germany is the main economic engine on the continent.

Germany’s government want to permit Iran’s clerical regime to use the European-Iranian trade bank (Europäisch-Iranische Handelsbank) in the northern German city of Hamburg for the transfer from the Deutsche Bundesbank. The Deutsche Bundebank has partnered with the EIH in the past to circumvent US sanctions on Iran.

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The US and the EU governments previously sanctioned the Hamburg- based bank for its role in Iran’s nuclear and missile program. After the world powers reached an agreement to curb its nuclear program in 2015, the sanctions on the bank were lifted.

The Jerusalem Post reported in 2011 that Germany's late foreign minister Guido Westerwelle worked with the Deutsche Bundesbank to enable Indian oil payments totalling at least $1 billion to be transferred via the EIH to Iran's regime.

An Israeli diplomat in Berlin told the Post  at the time that the Israeli government took notice of the EIH scandal, and the matter is being seriously discussed in the Foreign Ministry. Yinam Cohen, an Israeli Embassy spokesman in Berlin, told the Post in 2011 that the EIH bank operation ought to be shut down.

It is unclear if the Merkel administration will shut the EIH based on the new US sanctions that will come into effect next week.

The Post reported  that an April German intelligence report from the state of Bavaria concluded that the Islamic Republic of Iran is working to turn its conventional military weapons into a system for weapons of mass destruction.

“Iran, North Korea, Syria and Pakistan are making efforts to expand their conventional weapons arsenal through the production of weapons of mass destruction," wrote the Bavarian intelligence agency.

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