The United States on Thursday blacklisted 18 Iranian banks adding further strain to an economy already struggling with the burden of existing U.S. sanctions.

According to the U.S. Treasury, 16 of the banks were targeted for their role in Iran's financial sector, one bank was for being owned or controlled by another sanctioned Iranian bank and one is a military-linked bank.

Foreign companies which transact with those banks were given 45 days to close their operations before facing what are termed as "secondary sanctions".

Treasury Secretary Steven Mnuchin said the move, which cuts the banks off from the international financial system, reflected the commitment of the U.S. to stop illicit access to U.S. dollars.

"Our sanctions programs will continue until Iran stops its support of terrorist activities and ends its nuclear programs. Today's actions will continue to allow for humanitarian transactions to support the Iranian people," Mnuchin said.

Countries in Europe are against the wholesale financial services blacklisting because it will leave their biggest banks and other companies vulnerable to U.S. penalties for transacting with Iran.

Treasury Department had initially opposed the move saying that it would negatively affect U.S. relationships with Europe.

Critics of the sanctions also argue they will further limit Iran's ability to import humanitarian goods which are crucial during the coronavirus pandemic.

Since the withdrawal of the U.S. from the 2015 Iran nuclear deal, President Donald Trump's administration has gradually increased pressure on Iran by imposing sanctions on its oil sales, blacklisting top government officials and killing a top general in an airstrike.

(With input from agencies)