Jerusalem (CNN) -- The Israeli Cabinet on Sunday decided to expand economic sanctions against Iran, aligning its policies with the United States and Europe on trade with the Islamic republic.
Among the sanctions is an amendment to Israel's money laundering law that allows for more oversight and control over those trading with Iran. "It was also determined that state contact with companies that trade with Iran will be restricted," a government statement said.
The sanctions cover any type of trade with Iran, including private companies, a spokesman for Prime Minister Netanyahu said.
As part of the sanctions, Israel will declare Iran and "bodies linked to it" to be enemy elements.
"The committee's recommendations are an important step in the struggle against Iran's nuclear program," Netanyahu said. "These recommendations ensure that Israel will stand alongside other countries at the forefront of sanctions against Iran, in order to cause the Iranian regime to abandon its plans to develop nuclear weapons."
Earlier this year, the Israeli government indicated that the Jewish state needed to tighten its sanctions against Iran. At the time, Israeli foreign ministry spokesman Yigal Palmor said that while there was no direct or indirect trade between Israel and Iran, there was no legislation that specifically outlawed it.
"We know that the international community has been tightening the sanctions on Iran and as it turned out, to everybody's surprise, that there is a lacuna in the penal code in Israeli law," Palmor said in March
Since then, the Israeli government has been working on draft legislation that would fill that gap and match recent laws passed in the United States and the European Union, though existing Israeli security procedures already prevented Israeli firms from doing business with Iran.
Israel has been one of Iran's fiercest critics and has repeatedly said the international community is not doing enough to impose tough sanctions to stop Tehran's nuclear program, which it believes is aimed at building nuclear weapons.
Iran insists its nuclear program is for peaceful purposes.
Meir Javedanfar, an Iranian-Israeli political analyst who has written extensively about the two countries, has said that while the practical effect of formalized Israeli sanctions would be minimal, it was "important that Israel is doing at least what the U.S. and the European countries are doing" to maintain credibility in its repeated insistence that the world take action against Iran's nuclear program.
The move by the Israeli government comes in wake of recent allegations regarding Israeli commercial ties with Iran. In May, the U.S. State Department named Tanker Pacific, an Israeli-owned shipping company, as one of seven companies working with Iran in the energy sector.
Deputy Secretary of State James Steinberg has said the companies were "engaged in activities related to the supply of refined petroleum products in Iran."
CNN's Guy Azriel contributed to this report