US Sanctions Banque Misr’s UAE Operations Over Alleged Iran Ties

The United States has announced it will sever the UAE operations of Banque Misr, Egypt’s second-largest bank, from the US financial system. This action follows US allegations that the bank conducted business with the Iranian government.

“Treasury promised to sever every economic lifeline Tehran has left and finally end the threat of the Iranian regime,” US Secretary of the Treasury Scott Bessent stated in a Friday announcement. He added, “We also warned that Iran’s enablers cannot continue to enjoy access to the US dollar and the global financial system. Banque Misr UAE decided to find out the hard way, and today, we are taking the first step in holding it accountable for its continued, egregious support of the Iranian regime.”

Banque Misr issued a statement on Saturday confirming it was reviewing the US Treasury’s notice. The bank noted that the new “regulatory measures are subject to an official period for receiving and studying comments before a final decision is made,” and emphasized that it is addressing the matter with “the utmost seriousness and attention.” The bank also stated it would seek further information from the US Treasury Department and affirmed that its UAE branch continues to provide services in compliance with applicable rules.

The sanctions, announced under Operation Economic Outcast, are part of Washington’s intensified efforts to economically pressure Iran amid stalled truce talks. Last week, the US Treasury imposed sanctions on nearly 60 individuals and entities suspected of aiding Iran’s oil revenue, weapons procurement, and cyber operations. Iran has rejected these measures, with Economy Minister Ali Madanizadeh predicting their failure.

What is the new US financial limit on Banque Misr?

On Friday, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed a rule to revoke Banque Misr UAE’s correspondent banking access to US financial institutions. This would restrict only the UAE branches from conducting dollar-denominated transactions and accessing the US financial market.

The Treasury stated that Banque Misr UAE serves as a critical node for Iran’s access to US dollars, estimating that between January 2024 and June 2026, the bank processed approximately $1.8bn for 103 companies potentially involved in Iranian shadow banking networks. It highlighted that Iran relies on multi-jurisdictional shadow banking networks to secure dollar correspondent banking relationships abroad.

The Treasury further alleged that Banque Misr UAE’s customers include front companies used by Iran’s Ministry of Defence and the Islamic Revolutionary Guard Corps to evade US sanctions and launder money for Iranian Supreme Leader Mojtaba Khamenei. The proposed sanctions are expected to take effect after a 30-day public comment period and will not affect other branches of the bank.

What has Banque Misr said?

On Saturday, Banque Misr reaffirmed in a statement that it is reviewing the US Treasury notice and that the regulatory measures are subject to a comment period before a final decision. The bank pledged to study the details thoroughly and contact the US Treasury for additional information, while confirming its UAE branch continues operations according to existing rules.

Earlier, the Central Bank of Egypt stated that it, along with Egypt’s Ministry of Foreign Affairs, was in discussions with US authorities regarding Banque Misr’s UAE branches. The Central Bank emphasized that the measure is limited to USD transactions with correspondent banks and does not impact other banks in the Egyptian sector, including Banque Misr’s domestic or other overseas operations.

What has the UAE said?

The UAE’s central bank announced it had launched a special and urgent examination of Banque Misr’s branches, including a forensic review covering the period referenced by US authorities. In a statement, the UAE central bank stressed that licensed banks must avoid exposing the UAE’s financial system to reputational risks, comply with foreign laws, and not misuse the nation’s financial infrastructure.

Who else has the US taken action against?

Besides Banque Misr, the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Reza Mohammad Taeedi, the general manager of Dubai’s Bank Melli branch, under counterterrorism authorities. The Treasury noted that Bank Melli has facilitated billions of dollars in transactions for the Islamic Revolutionary Guard Corps Qods Force (IRGC-QF), enabling fund movements and support for Iranian-aligned proxies, including in Iraq.

Simultaneously, OFAC sanctioned Hong Kong-based Kameng Trading Limited for allegedly aiding sanctioned Iranian individuals in accessing the international financial system. The Treasury specified that Pedram Pirouzan Exchange House (Opal Exchange) used Kameng Trading to launder money for Iran.

Why is the US sanctioning companies doing business with Iran?

In what officials termed an “economic D-Day” under Operation Economic Outcast, the United States announced sanctions on Iran and various global entities on Monday, August 24, aiming to isolate Tehran. At least 60 entities across the Middle East, Asia, and Europe have been targeted, potentially disrupting energy markets and the global economy.

Nearly six months into its conflict with Iran, the US is witnessing limited impact from military operations, leading the Trump administration to escalate economic sanctions. Analysts suggest these measures are unlikely to compel Iran into meeting demands. “The United States is returning to economic pressure because military force has failed to deliver the quick victory it expected,” said Negar Mortazavi, a senior fellow at the Center for International Policy.

Iran has rejected the sanctions, with government spokeswoman Fatemeh Mohajerani stating that the government and President Masoud Pezeshkian will navigate the challenges. “With sound judgment and by preserving unity, we will pass through this intense gauntlet,” she posted on X.

IRGC spokesperson Sardar Mohebi argued that economic warfare signifies US defeat on the battlefield, while Ali Akbar Dareini of Tehran’s Centre for Strategic Studies noted Iran’s familiarity with sanctions: “[Iran] has a PhD in circumventing sanctions, so it is absolutely sure that it will emerge victorious.” He added that the sanctions aim to provoke economic collapse but are based on a miscalculation, referencing the failed US military aggression on February 28.

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