Investing.com -- U.S. Treasury Secretary Scott Bessent on Tuesday urged allies to more aggressively disrupt Iran's financing operations and announced plans to remove outdated designations from the Treasury's sanctions list to help financial institutions better identify sophisticated terrorist financing schemes.

Speaking at an anti-terrorism financing conference following a G7 finance leaders meeting in Paris, Bessent called on participants to "stand with us in full measure" against Iran.

Bessent said European partners should join the United States in taking action against Iran by designating its financiers, exposing shell and front companies, closing bank branches, and dismantling proxy networks. He also called on countries in the Middle East and Asia to eliminate Iran's shadow banking networks.

The remarks come as the Trump administration attempts to pressure Tehran to reopen the Strait of Hormuz and restore oil flows disrupted by U.S.-Israeli attacks on Iran. The Treasury has intensified sanctions through a program called "Economic Fury," which targets Iran's shadow banking networks and has frozen nearly $500 million in cryptocurrency linked to Iran's regime.

To improve effectiveness, the Treasury plans to modernize its sanctions framework because "our adversaries adapt and innovate" by creating new shell companies, Bessent said.

Most U.S. Treasury sanctions are imposed through the Specially Designated Nationals List, which contains tens of thousands of individuals, companies and entities that are blocked from the dollar-based financial system and have assets frozen. Anyone conducting transactions with designated entities risks sanctions.

Bessent said the Treasury is reviewing outdated and obsolete designations to help financial institutions concentrate on the most sophisticated terrorist financing and sanctions evasion schemes.

He said effective sanctions are aggressive and targeted, but those maintained too long can create unintended consequences.

"Sanctions are meant to change behavior, not to punish populations," Bessent said. "Sanctions left in place for years with no visible and tangible changes in behavior can have generational impacts that are nearly impossible to predict."

The Treasury's approach would maintain agility to maximize effectiveness, and Bessent cited examples of easing sanctions on Syria and Venezuela after regime changes as examples of how the Trump administration intends to adjust sanctions.

U.S. President Donald Trump said he postponed a major military strike on Iran scheduled for Tuesday, announcing that he paused the operation at the direct request of Gulf Arab leaders while serious negotiations take place. Trump said in a Truth Social post that the leaders of Saudi Arabia, Qatar, and the UAE intervened and asked him to hold off on a planned large-scale attack to allow diplomatic channels a chance to end the war.