The United States warned European allies with sanctions earlier this month in response to the creation of the Instrument in Support of Trade Exchanges, or Instex, a financial mechanism, created by the United Kingdom, France and Germany to evade U.S. economic penalties on Tehran.

“I urge you to carefully consider the potential sanctions exposure of Instex,” Sigal Mandelker, the U.S. Treasury Department’s Undersecretary for Terrorism and Financial Intelligence, wrote in a May 7 letter to Instex President Per Fischer obtained by Bloomberg. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Instex was created in January to enable firms to do business with Iran without utilizing U.S. dollars or banks, thereby allowing them to circumvent U.S. sanctions on the Islamic Republic that were reimposed after the United States withdrew from the 2015 Iran nuclear deal.

“This is a shot across the bow of a European political establishment committed to using Instex and its sanctions-connected Iranian counterpart to circumvent U.S. measures,” Mark Dubowitz, CEO of the Foundation for Defense of Democracies, told Bloomberg.

The Treasury Department told the outlet that “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.”

This development comes as U.S. Secretary of State Mike Pompeo is undecided over a possible extension of a 90-day waiver for Iraq to continue importing Iranian energy.

“The secretary has not made a decision on this,” spokesperson Morgan Ortagus told reporters on Wednesday.