All financial institutions in the United Kingdom have severed all ties with Iranian banks following the release of a UN report that Tehran is constructing nuclear weapons, said Britain’s Chancellor of the Exchequer George Osborne.

As a result, as of 3 pm (London time) Monday, British financial institutions ended all business relationships and transactions with all Iranian banks, including the Central Bank of Iran.

We have ceased all contact between the UK's financial system and the Iranian financial system,” Osborne said.

We're doing this because of international evidence that Iran's banks are involved in the development of Iran's weaponized military nuclear weapon program. We're doing this to improve the security not just of the whole world, but the national security of the United Kingdom.

In a statement, the UK Treasury explained that Iranian banks play a crucial role in providing financial services to individuals and entities within Iran's nuclear and ballistic missile programs, as companies carrying out proliferation activities require banking services. This measure will protect the UK financial sector from being unknowingly used by Iranian banks for proliferation-related transactions.”

Osborne noted that this represented the very first time that the British government has cut off a country’s entire banking business from the UK financial sector.

This is also the first time that Britain has used powers created by the Counter-Terrorism Act of 2008 to cut off a country's banking sector in this manner.

Separately, the United States and Canada are also expected to impose fresh new sanctions against Iran in order to pressure Tehran into ending its nuclear weapons program.

A U.S. government official told the Associated Press that the new sanctions will target Iranian firms, its petrochemical industry and the elite Revolutionary Guard force.

Iranian government officials have repeatedly denied that they are building atomic weapons, insisting that the country’s nuclear program is designed only for peaceful and scientific research purposes, including energy.

However, according to various Western media reports, satellite surveillance photos of Iran indicate heightened activity around a particular building in Parchin that the International Atomic Energy Agency (IAEA) believes are chambers where Iran is building weapons.

British Foreign Secretary William Hague said that London has consistently made clear that until Iran engages meaningfully, it will find itself under increasing pressure from the international community. The swift and decisive action today coordinated with key international partners is a strong signal of determination to intensify this pressure.