UNITED NATIONS â€"  An expert panel monitoring U.N. sanctions on Iran has reported that Syria continues to be the main destination of illicit Iranian weapons, a Security Council diplomat said Wednesday.

The diplomat, speaking on condition of anonymity because the panel's report has not been released, said it identified three new illegal shipments, two involving Syria which was also the previous destination of a majority of Iranian arms shipments.

It said there was "a high probability" that the third large shipment of rockets originated in Iran, the diplomat said. Britain reported last year that the rocket shipment was destined for Taliban militants in Afghanistan.

"Syria continues to be the central party to illicit Iranian arms transfers," the diplomat, who has seen the report, quoted it as saying.

The report to the U.N. Security Council committee monitoring sanctions is expected to be discussed by the 15 council members and could be changed before it is finalized. The diplomat said all eight experts on the panel signed off on it.

The U.N. Security Council first imposed sanctions on Iran in December 2006 and has been ratcheting up the punitive measures since then in hopes of pressuring the government to suspend uranium enrichment and start negotiations on its nuclear program. But despite four rounds of sanctions, Iran has refused to do so. Enriched uranium can be used to make both nuclear fuel and nuclear weapons material.

Iran insists its nuclear program is purely peaceful and aimed solely at producing nuclear energy.

The report coincides with a new round of talks in Baghdad next week between Iran and the six-nation group comprising the permanent U.N. Security Council members plus Germany on its nuclear program.

The diplomat said the report cites efforts by Iran to try to circumvent sanctions by constantly change the ownership, names and flags of ships from companies that are under U.N. sanctions. It said these changes "are suited to obscuring the identity of vessels" and it is likely that maritime shipments of prohibited items are continuing, the diplomat said.

It has also been using front companies, concealing the end use and end users of items, falsifying documents, reaching out to multiple suppliers for the same item, and using the Iranian diaspora to procure banned items, the diplomat said.

The panel said Iranian financial transactions using money transfer businesses known as hawalas, its cash transfers, and barter trade have all increased, the diplomat said.

The report said the panel was informed of "the case of a small non-financial firm led by an expatriate Iranian that had transformed itself into a company involved in transferring funds received from a non-sanctioned Iranian bank to a variety of recipients through the world," the diplomat said.

It said "$11 billion had been processed over 18 months" by this firm, the diplomat said.

"Understanding whether and how the above-described methods could be used for financing procurement for sanctioned nuclear and ballistic programs is challenging," the diplomat quoted the panel as saying.