Vienna, Austria ? The U.N. nuclear monitor reported notable advances in Iran’s uranium enrichment program Wednesday while warning for the first time that its knowledge of the country’s nuclear activities was shrinking.

The International Atomic Energy Agency’s findings, while not surprising, set the stage for possible new U.N. sanctions – the third set of penalties since December.

The report by IAEA chief Mohamed ElBaradei expressed the agency’s concern about its “deteriorating” understanding of unexplored aspects of Iran’s nuclear program.

That finding reflected frustration with the results of a four-year IAEA investigation opened after revelations that Iran for nearly two decades had been clandestinely developing enrichment and other nuclear activities that could be used to make weapons.

A senior U.N. diplomat, who spoke on condition of anonymity because he was not authorized to publicly comment on the report, suggested the shrinking hole left for inspections by Iran’s rollback of previous monitoring agreements was potentially as worrying as its refusal to suspend uranium enrichment.

In Washington, Undersecretary of State Nicholas Burns said the report showed “Iran is thumbing its nose at the international community.”

Gregory L. Schulte, the chief U.S. delegate to the IAEA in Vienna, asked: “How can the world believe Iran’s claims that its pursuits are peaceful, if Iran’s leaders increasingly withhold information and cooperation from the world’s nuclear watchdog?”