WASHINGTON (Reuters) - The Obama administration on Tuesday clarified how it would enforce recently passed Iran sanctions including how the United States would determine if another country has significantly reduced oil purchases from Iran.

"We are working intensively to implement the (National Defense Authorization Act's) financial sanctions as part of our broad-based efforts to stop Iran's illicit nuclear activities," David Cohen, U.S. Treasury under secretary for terrorism and financial intelligence, said in a statement.

Secretary of State Hillary Clinton, in consultation with Treasury Secretary Timothy Geithner, Energy Secretary Steven Chu, and the Director of National Intelligence James Clapper will determine whether countries have reduced their purchases of Iran's oil enough to avoid penalties, guidance from the Treasury Department said.

Clinton will consider the amount and percentage of reductions in purchases of Iranian oil and whether countries have ended contracts for future deliveries of Iranian petroleum, or taken other actions that demonstrate a commitment to reduce the purchases.

Oil shipments provided as payments for outstanding debts that involve financial institutions are considered transactions that can be penalized, the guidance said.

On December 31, President Barack Obama signed into law the harshest in a series of U.S. sanctions on Tehran over its nuclear program.

The United States and other Western countries accuse Iran of trying to build a nuclear weapon. Iran says its nuclear program is for generating electricity and for medical purposes.

The latest sanctions aim to reduce Iran's ability to sell crude oil, its main export, by targeting transactions involving its central bank. They include exemptions for the sale of food, medicine or medical devices to Iran.

"We urge banks worldwide to quickly terminate their ties to the Central Bank of Iran, both to protect themselves from CBI's illicit financial activities and to isolate the CBI from the international financial system," Cohen said.

(Reporting by Doug Palmer and Timothy Gardner; editing by Mohammad Zargham)