"I have urged the Turkish government to assist Turkish banks in protecting themselves from Iran's attempts to abuse its existing trade and financial relations with Turkey to support its proliferation activities," David Cohen told a news briefing.

"When trade relationships expand, the risk of abuse by Iran expands at the same time," said Cohen, the assistant secretary for terrorist financing, at the end of a three-day visit to Turkey.

Cohen said he warned leading Turkish bankers that "foreign banks that do significant business with Iranian banks or businesses involved in proliferation or terrorism risk not only their reputation but also losing access to the US financial system."

The US official said he had insisted on "the importance of isolating (Iran's) Bank Mellat entirely, including its branches in Turkey," referring to a state-owned commercial Iranian bank, one of the Islamic republic's largest.

Turkey, the only Muslim-majority member of NATO, has had good ties with its neighbour Iran since the Islamist-rooted government of Prime Minister Recep Tayyip Erdogan took office in 2002.

Ankara in June 2010 voted against new UN economic sanctions against Iran but indicated that it would observe them.

But Turkey said it opposed new measures decided separately by the United States and the European Union.

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