European Union foreign ministers agreed to sanction an Iranian-owned bank based in Hamburg that the U.S. says has been at the center of Tehran's efforts to expand its nuclear program, European officials said.

The decision Monday to freeze banking activity at the European-Iranian Trade Bank came as part of a broader effort by the EU to sharpen its sanctions against Iran.

In addition to imposing strict controls on EIH, as the bank is known under its German acronym, the EU ministers agreed to sanction more than 100 people and entities with suspected ties to Iran's nuclear program, including the Islamic Republic of Iran Shipping Line and Iran's Islamic Revolutionary Guard Corps, according to a European Commission spokeswoman. The full list of designated entities and individuals will be published Tuesday, the spokeswoman said.

A person who answered the phone at the Islamic Republic of Iran Shipping Line, declined to comment. A spokesman for the Islamic Revolutionary Guard Corps, could not be reached.

After more than three years of deliberation about EIH, the EU concluded that the bank executed transactions on behalf of firms that were procuring technology for Iran's nuclear program in violation of United Nations Security Council resolutions and EU regulations. The sanction directive imposes a freeze on accounts held at the bank and prohibits the bank from doing business within the European Union.

The EU foreign ministers based their decision on allegations of sanction violations detailed in an addendum to the decision. According to the EU allegations, in August 2010 EIH froze accounts in Hamburg controlled by two Iranian banks, which were sanctioned by the U.N. Security Council, but then shortly afterward, EIH resumed euro-denominated business with the two banks via accounts held at an unsanctioned Iranian bank, according to a copy of the EU sanctions directive reviewed by The Wall Street Journal.

Reached by phone Monday morning, an EIH spokeswoman declined to comment on the bank's designation. In a statement posted on its website in April, the EIH said, the allegations against the bank are "politically driven and without substance," adding that the bank adheres to all U.N. Security Council resolutions and EU directives.

"As long as the EIH abides these rules, it would be politically indefensible to take punitive action against this bank, particularly seen from the angle it would severely hit the European export economy as well," said the statement signed by the EIH board of management.

Also, citing allegations of sanction violations, France and the United Kingdom in 2008 called for sanctioning EIH. Germany's Economics Ministry, however, opposed sanctions against EIH and other Iranian banks, citing the need for banks to process transactions related to legitimate business in Iran.

Germany changed its position earlier this month after German investigators reviewed new information provided by international partners, a person familiar with the German decision said.

An Iranian Embassy spokesman declined to comment on the bank's designation.

The new EU sanctions also strengthen Europe's implementation of a U.N. Security Council resolution last year by primarily targeting entities linked to Iranian shipping firms and the nation's security services, a spokeswoman for the European Commission High Representative for Foreign Affairs and Security Policy said.

The EU directive requires sanctioned entities and individuals to halt business activity within the EU and prohibits sanctioned individuals from travelling in the EU.

The sanctions are designed to nudge Iran into complying with U.N. Security Council resolutions. Earlier this year the U.S., France, the U.K, Germany, Russia and China concluded a series of on-again, off-again talks with Iran without significant progress, said a spokeswoman for the European Commission, which helped organize the talks.

The U.S., which has imposed its own unilateral sanctions, has pressed the EU to impose tough sanctions against Iran which U.S. officials say is developing technology to build nuclear weapons in violation of U.N. Security Council resolutions.

The Security Council has tasked the International Atomic Energy Agency with determining whether Iran is violating its international obligation to pursue only peaceful uses of nuclear technology. The IAEA says Iran's lack of cooperation prevents the U.N. agency from conclusively determining whether Iran's nuclear program is military in nature. Iran says it fulfills all its international obligations, and its nuclear program is for peaceful purposes.