WASHINGTON (Reuters) – The United States yesterday designated two foreign banks as institutions of «primary money-laundering concern» to bar them from US banking activity. The Treasury Department accused First Merchant Bank of the breakaway Turkish-Cypriot state and Infobank of Belarus of involvement in separate money-laundering schemes involving offshore accounts and the Iraqi oil-for-food program. Once designated, the Treasury can begin to impose a range of measures to cut off the banks from the US financial system. «There will be significant consequences for institutions that launder money or engage in similar corruption: We will cut you off from the US financial system,» the Treasury’s undersecretary for terrorism and financial intelligence, Stuart Levey, said in a statement. The Treasury accused First Merchant Bank, licensed as an offshore bank in the Turkish-Cypriot statelet, of being used as a conduit for laundering fraudulently obtained funds, and also accused the bank’s owners of having links with organized crime. Infobank, a privately owned Belarussian bank, was accused of «complicity laundering funds derived from fraudulent transactions involving Iraq.» «Infobank laundered funds for the former Iraqi regime of Saddam Hussein that were derived from schemes to circumvent the United Nations oil-for-food program,» the Treasury said. It accused Infobank of laundering the funds through foreign banks and shell corporations, and finally returning the funds to the Iraqi government. The Treasury invoked a provision of the USA Patriot Act, known as Section 311, in its designation of the two banks.