Swiss National Bank Chairman Thomas Jordan
Swiss National Bank Chairman Thomas JordanReuters

Switzerland on Monday extended some financial sanctions against Iran, but stopped short of freezing the assets of Iran's central bank and imposing an oil embargo.

The move by Europe's officially neutral nation underscored an emerging policy rift with other Western powers over Tehran's nuclear ambitions.

The Swiss Federal Council (cabinet) opted to freeze the assets of eight companies and three individuals in a move it claims puts Geneva largely in line with restrictive measures voted by the European Union in January.

But the Swiss Economics Ministry made it clear that the country famous for both its banking secrecy laws and no-questions asked policies of its bankers, would not follow the EU in freezing the assets of the Iranian central bank "due to its importance for the Iranian economy."

As such, Geneva has turned itself into a banking sanctions loophole through which Iranian oil can be bought and sold. Closing banking and insurance channels for the purchase of Terhan's oil has been a key element of the Western sanctions effort.

The EU has incrementally tightened financial restrictions on Iran. On 23 January the EU agreed to phase in an oil embargo and to freeze the assets of Iran's central bank in an effort raise pressure on Tehran over its controversial nuclear program.

The Swiss ministry said it would make a decision on the EU's ban on the import, purchase or shipping of Iranian crude oil at a "later date," without giving specifics.

Switzerland does not directly import Iranian oil, but numerous oil companies based in Geneva are deeply vested in trading Iranian oil on the commodities market.

Switzerland has represented US interests in Iran since 1980, when Washington cut diplomatic ties with Tehran following the 444 day siege of the US embassy during which several American diplomats were held hostage.