The British and U.S. governments announced Monday a ban on credit and financial transactions with Iran's banks and central bank as punishment for building nuclear weapons. Canada's government is also expected to impose the same sanctions.

The sanctions were triggered by a recent report of the International Atomic Energy Agency (IAEA) that Iran is secretly developing a nuclear weapon. The IAEA report says Iran built a computer model to study the explosion of a nuclear bomb, detonation devices and a containment vessel for conducting explosive experiments, according to AFP. There were also attempts to arm missiles with a nuclear warhead.

Britain's Chancellor George Osborne, who announced the sanction, was quoted by BBC as saying, "We're doing this to improve the security not just of the whole world, but the national security of the United Kingdom."

Britain's Treasury, in a statement, also said that the sanction aims to prevent Iranian banks from funding the development of nuclear weapons and British banks from "being unknowingly used for nuclear proliferation-related transactions."

Meanwhile, a U.S. official who requested anonymity said the country's new sanctions against Tehran will affect Iranian companies, the Revolutionary Guard force and Iran's petrochemicals sector. Another official said Iran's oil and gas sector will not be covered by the sanctions to prevent oil price increase.

Tehran has labeled the IAEA report as fabrication and continues to insist that its nuclear development programme is for peaceful purposes.