Iran on Friday denied accusations by France, Britain and the United States that its banks were involved in illegal nuclear activity and in financing terrorism.

The U.N. Security Council has imposed three sets of limited sanctions against Iran for refusing to halt uranium enrichment. The third sanctions resolution adopted in March calls on all countries "to exercise vigilance" on financial transactions with all Iran banks, especially Bank Melli and Bank Saderat, to avoid any support for nuclear-related activities.

Iran has refused to comply with repeated international demands to halt nuclear enrichment, a process that can be used to produce fuel for nuclear weapons or nuclear energy. The U.S. suspects the program is aimed at making nuclear weapons, but Iran maintains it is for peaceful purposes.

Earlier this month, Britain, France and the U.S. warned in a letter to the Security Council against "Iran's continued attempts to conduct prohibited proliferation-related activity and terrorist financing." The three Western allies argued that Iranian banks were trying to get around sanctions by covertly conducting transactions.

Iran rejected the charge in a letter to the Council on Friday, saying Iranian banks "have never been involved in any illicit activities including in non-peaceful nuclear activities— simply because there are no such non-peaceful nuclear activities in Iran."

It called the allegation that the banks were being used to finance terrorist activities "baseless and absurd," saying it was "a malicious attempt to unjustifiably dissuade others from dealing with Iranian banks..."

"The attempt of the three countries to seek the restriction of the activities of the Iranian banks is intended not only to exert undue pressure on the Iranian government, but also to disrupt the banking and financial affairs of millions of deposit holders and customers of those banks," Iran's deputy ambassador Mehdi Danesh-Yazdi said in the letter.

Last week, the European Union tightened trade sanctions against Iran beyond the existing U.N. sanctions. France, which holds the rotating EU presidency, said European governments would also carefully watch financial groups doing business with Iranian banks.