US President Donald Trump on Monday branded Iran's elite Islamic Revolutionary Guard Corps a terrorist organization, an unprecedented step that raises the spectre of retaliation from Tehran in an increasingly tense the Middle East, reports Reuters.
It is the first time the United States has formally labelled another country's military a terrorist group.
"The IRGC is the Iranian government's primary means of directing and implementing its global terrorist campaign," Trump said in a statement.
Iran immediately condemned the decision as an illegal act prompted by Tehran's regional influence and "success in fighting against Islamic State [Daesh]," according to state television.
READ: US army will not be stable if Revolutionary Guards are blacklisted, warns Iran
Tensions between the two countries have grown since Trump pulled the United States out of a 2015 nuclear deal with Tehran last May and reimposed sanctions that had crippled Iran's economy. Trump said the accord did not address Iran's ballistic missile activity or what he saw as its malign influence in the region.
Set up after the 1979 Islamic Revolution with the mission of protecting the Shia clerical ruling system, the IRGC is Iran's most powerful security organization and has a huge influence in its political system, controlling large swathes of the economy and the armed forces.
The IRGC's involvement in Iran's banking and shipping industries could complicate matters with US allies including the European Union. Those who do business with the Guards could now receive up to 20 years in prison and be barred from entering or doing business in the United States.
The action on Monday "makes crystal clear the risks of conducting business with, or providing support to, the IRGC," Trump said. "If you are doing business with the IRGC, you will be bankrolling terrorism."
READ: Iran threatens to blacklist US army
After reports of the planned US designation emerged late on Friday, Iranian lawmakers warned Tehran will take reciprocal action.
Critics have warned the US action could open US military and intelligence officials to similar moves by unfriendly governments.
The United States has already blacklisted dozens of entities and people for affiliations with the IRGC, but not the organization as a whole.