Overview
On August 7, 2025, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") announced a new round of sanctions targeting 18 entities and individuals involved in Iran's efforts to circumvent U.S. sanctions programs and fund its surveillance and military infrastructure. The August 7 designations include offshore banks, financial institutions, and technology firms that OFAC alleges are central to Iran's shadow banking infrastructure. We last reported on OFAC action targeting Iran's shadow banking network on June 18, 2025.
This marks the third major action in 2025 against Iran's shadow banking system, following OFAC's June 6 and July 9 designations targeting oil brokers and front companies linked to the Islamic Revolutionary Guard Corps ("IRGC"). Similar to the previous actions, the latest action is taken pursuant to Executive Order 13902 and in furtherance of National Security Presidential Memorandum 2, which directs a campaign of maximum economic pressure on Iran.
Iran's Shadow Banking and Offshore Infrastructure
OFAC's most recent designations highlight Iran's alleged use of decentralized offshore banking and alternate messaging systems to bypass U.S. sanctions programs. Among the entities targeted is Cyrus Offshore Bank, established in Iran's Kish Free Zone under a special license from the Central Bank of Iran. Though outwardly independent, OFAC alleges that Cyrus Bank is owned and operated by the sanctioned Parsian Bank, and has been used to route oil revenues to the IRGC via the Chinese Bank of Kunlun ("Kunlun").
OFAC also designated RUNC Exchange System Company, developer of Iran's Cross-Border Interbank Messaging System ("CIMS"), which facilitates foreign financial transactions outside of traditional payment systems. In late 2023, Iran's Central Bank authorized the use of CIMS abroad to insulate foreign financial transactions from potentially applicable sanctions programs while facilitating ties with overseas banks. CIMS has been used to connect Iranian banks with foreign institutions, such as Kunlun, in an effort to allegedly conduct clandestine transactions contrary to U.S. sanctions policy objectives.
Technology and Surveillance Firms
OFAC also sanctioned Pasargad Arian Information and Communication Technology Company ("FANAP") and its subsidiaries for their alleged role in enabling Iran's domestic surveillance regime. FANAP, owned by Pasargad Bank, provides banking infrastructure and surveillance technologies, including facial recognition software used by Iran's Morality Police and secure messaging apps designed to replace Telegram.
FANAP's subsidiaries have partnered with Iran's Ministry of Intelligence and Security and the Ministry of Information and Communications Technology to develop the National Information Network, a countrywide intranet used to restrict access to the global internet.
OFAC Designation Implications
As with prior OFAC designations, all property and interests in property of the designated individuals and entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Entities owned 50 percent or more by one or more blocked persons are also blocked under OFAC's 50% Rule.
All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
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