Treasury officials are targeting foreign banks and front companies that allegedly helped Iranian-linked funds move through the dollar system after FinCEN identified about $9 billion in potential shadow-banking activity passing through U.S. correspondent accounts in 2024.
By yourNEWS Media Newsroom
Billions of dollars in suspected Iranian shadow-banking transactions have continued to pass through U.S. correspondent accounts despite years of sanctions, exposing a vulnerability the Trump administration is now attempting to close as it intensifies financial pressure on Tehran.
The Wall Street Journal reported Saturday that Iranian-linked networks use foreign banks, shell companies and intermediaries in places including the United Arab Emirates and Hong Kong to disguise transactions before they enter the dollar system. A Financial Crimes Enforcement Network analysis released in October 2025 identified approximately $9 billion in potential Iranian shadow-banking activity that moved through correspondent accounts maintained at U.S. financial institutions during 2024.
Correspondent banking allows foreign financial institutions to conduct dollar transactions through accounts held at American banks. Iran has used networks of exchange houses and front companies to exploit that system while attempting to evade sanctions, according to FinCEN, which said the networks help facilitate oil sales, procurement and other financial activity linked to Tehran.
Treasury Secretary Scott Bessent placed those networks at the center of Operation Economic Outcast, launched Aug. 24 as a broader campaign to sever Iran’s remaining access to the international financial system. Four days later, Treasury proposed cutting off U.S. correspondent access for Banque Misr’s UAE operations after FinCEN said the branches processed roughly $1.8 billion between January 2024 and June 2026 for 103 companies potentially associated with Iranian shadow-banking networks.
Banque Misr, an Egyptian state-owned bank, maintained dollar correspondent relationships with three unnamed American institutions involved in the transactions, according to Treasury. The bank’s publicly listed correspondent relationships include JPMorgan Chase and Citigroup, although that alone does not establish that either institution processed the specific Iranian-linked transactions identified by FinCEN. Both banks declined to comment to the Journal.
Banque Misr said it was engaging with U.S. authorities and respects “relevant regulatory and legal frameworks,” while Egypt’s Foreign Ministry said it was communicating with Washington. The Treasury action remains a proposal subject to a 30-day public comment period and is not a full sanctions designation. If finalized, U.S. financial institutions would be prohibited from opening or maintaining correspondent accounts for Banque Misr UAE.
Bessent said the administration intends to hold foreign institutions accountable when they facilitate Iranian access to dollars. “Iran’s enablers cannot continue to enjoy access to the U.S. dollar and the global financial system.”
The enforcement effort also highlights a longstanding dilemma for Washington. The dollar’s dominant role in global finance gives U.S. sanctions much of their power, but aggressively restricting access can encourage foreign governments and businesses to seek alternatives such as the Chinese yuan, cryptocurrency or other payment systems.
“The more you use the tools, the more you create incentives for alternatives to the dollar,” Alex Zerden, a former Treasury official and founder of Capitol Peak Strategies, told the Journal.
Other specialists argue that pressure on foreign banks alone will not be enough. Elaine Dezenski, a former senior Department of Homeland Security official now with the Foundation for Defense of Democracies, said shadow-banking networks are difficult but not impossible to trace and that U.S. institutions and their correspondent partners are “squarely on the hook” for detecting suspicious activity.
Gene Lange, performing the duties of Treasury undersecretary for terrorism and financial intelligence, delivered a similar warning, telling the Journal that financial institutions “are on notice” and that compliance is not optional.
The $9 billion identified by FinCEN does not mean every transaction was conclusively proven to involve sanctioned Iranian funds. The agency characterized the activity as potential Iranian shadow banking based on Bank Secrecy Act reports, open-source information and law-enforcement analysis. Still, the scale of the transactions illustrates how Iran-linked networks can reach the U.S. financial system indirectly even when Iranian banks themselves are largely cut off from it.
Operation Economic Outcast is designed to tighten those remaining channels by targeting the foreign institutions, intermediaries and front companies that allow Iranian-linked money to move internationally. Whether that effort can significantly reduce Tehran’s access to dollars without accelerating the shift toward alternative financial systems remains one of the central challenges facing the administration’s sanctions campaign.
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