Japan's biggest bank, Mitsubishi UFJ Financial Group Inc, will halt all Iran transactions to comply with the reimposition of U.S. sanctions against Tehran later this year, according to a document seen by Reuters on Thursday.

The banking unit of Mizuho Financial Group Inc said later on Thursday it would take the same action.

The move by MUFG is likely to force a halt in Iranian crude oil purchases by Japanese companies as its banking unit handles the bulk of those imports, industry sources have told Reuters.

The bank was fined hundreds of millions of dollars in 2014 for misleading U.S. regulators about its transactions with sanctioned countries including Iran.

"The bank is afraid of U.S. sanctions, so cannot handle trade transactions. Other Japanese banks are likely to be in the same position," said a Japanese analyst who declined to be identified due to the sensitivity of the issue.

Trump in May withdrew the United States from a multi-party deal on Iran's nuclear programme and ordered the reimposition of U.S. sanctions against Tehran that were suspended under the 2015 agreement.

Washington later told countries to stop buying Iran's crude oil, that nation's most important export item, by Nov. 4 or face financial consequences.

Japan is one of the biggest buyers of Iranian crude but the country's oil refiners have said they may have to stop loading Iranian crude oil from October if they cannot get an exemption from U.S. sanctions to allow imports to continue.

Beyond oil, trade between Japan and Iran is minimal.

MUFG Bank Ltd [MTFGTU.UL] has informed customers in Japan about its decision, given that dealings with Iranian financial institutions will be prohibited after a 180-day wind-down period, which ends on Nov. 4, the document showed.

MUFG may revise its policy should additional guidance be given by the United States, the bank said in the document.

MUFG did not immediately respond to a request for comment.

(Reporting by Osamu Tsukimori and Taiga Uranaka; Writing by Aaron Sheldrick; Editing by Jacqueline Wong and Christopher Cushing)

By Osamu Tsukimori and Taiga Uranaka