Overview
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently took two sanctions actions under Operation Economic Outcast, the U.S. government’s campaign targeting Iran and persons who facilitate its access to the international financial system. The actions target both banking channels and digital asset infrastructure that OFAC alleges have facilitated Iran-related transactions and sanctions evasion.
On September 14, OFAC designated Russian financial institution VTB Bank Public Joint Stock Company (VTB Bank) pursuant to Executive Order (E.O.) 13902 for operating in the financial sector of the Iranian economy. According to OFAC, VTB Bank has established correspondent banking relationships with sanctioned Iranian financial institutions, taken steps to move billions of dollars in frozen Iranian assets and created a settlement system using Iranian rials and Russian rubles to facilitate bilateral trade. VTB Bank was already subject to U.S. sanctions under separate Russia-related authorities.
Additionally, on September 17, OFAC designated Iranian digital asset exchange BitBank and its software developer Pishtaz Simorgh Electronic Trade Company (Pishtaz Simorgh), along with three individuals associated with previously designated Iranian financier Babak Zanjani. OFAC alleged that, between June and July 2026, Zanjani used BitBank to facilitate the transfer of hundreds of millions of dollars’ worth of Bitcoin to the Islamic Revolutionary Guard Corps (IRGC). OFAC designated BitBank and Pishtaz Simorgh pursuant to E.O. 13902 for operating in the digital asset sector of the Iranian economy and designated the three individuals under the same authority for acting for or on behalf of previously designated persons.
The actions demonstrate OFAC’s continued focus on financial intermediaries and alternative payment channels that it considers are facilitating Iranian sanctions evasion. They also follow OFAC’s August 24 launch of Operation Economic Outcast, which we posted about last month.
Key features
OFAC designated VTB Bank under E.O. 13902 for operating in the financial sector of the Iranian economy. Following OFAC’s press report, VTB Bank has expanded its presence in Iran and, over the past three years, established correspondent banking relationships with sanctioned Iranian financial institutions. OFAC also stated that VTB Bank had taken steps to move billions of dollars in frozen Iranian assets and established a settlement system through correspondent accounts denominated in Iranian rials and Russian rubles.
We note that VTB Bank was already subject to U.S. sanctions under Russia-related authorities. OFAC previously designated VTB Bank in February 2022 pursuant to E.O. 14024 for its connections to the government of Russia and Russia’s financial services sector, and in January 2025 pursuant to E.O. 13662 for operating in Russia’s financial services sector. The September 14 action adds a separate Iran-related basis for its designation under E.O. 13902.
OFAC also highlighted the potential secondary sanctions implications of the new designation for non-U.S. financial institutions. Specifically, OFAC stated that foreign financial institutions continuing to deal with VTB Bank following its designation under Iran sanctions authorities face additional sanctions risk. OFAC may prohibit or impose strict conditions on U.S. correspondent or payable-through accounts of a foreign financial institution that knowingly conducts or facilitates certain significant transactions on behalf of a person designated pursuant to the relevant authority.
OFAC’s September 17 action focused on digital asset infrastructure associated with Zanjani, whom OFAC had previously designated. OFAC described BitBank as an Iranian digital asset exchange controlled by Zanjani and stated that the exchange had been used as part of his sanctions-evasion network. OFAC also stated that previously designated Hormuz Safe Marine Services Authority had used BitBank since June 2026 to transfer payments it received to the Iranian regime.
OFAC designated BitBank and Pishtaz Simorgh, which developed BitBank’s digital asset software, pursuant to E.O. 13902 for operating in the digital asset sector of the Iranian economy. The designation follows OFAC’s August 24 determination that the digital asset sector is among the sectors of the Iranian economy that may be targeted pursuant to E.O. 13902.
OFAC also designated Hossein Ali Zaker Hossein, Mohammad Mahdi Zaker Hossein and Seyed Adel Heidari, whom OFAC identified as executives of the previously designated Dot One Value Creation Group and participants in Zanjani’s digital asset network. Following the report, Hossein Ali Zaker Hossein was designated for acting or purporting to act for or on behalf of Zanjani, Mohammad Mahdi Zaker Hossein for acting or purporting to act for or on behalf of Pishtaz Simorgh, and Seyed Adel Heidari for acting or purporting to act for or on behalf of Dot One.
As a result of the two actions, property and interests in property of the designated persons 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, directly or indirectly, 50 percent or more, individually or in the aggregate, by one or more blocked persons are also blocked. Unless authorized by OFAC or exempt, U.S. persons are generally prohibited from engaging in transactions involving the property or interests in property of blocked persons.
Key takeaways
These actions reinforce OFAC’s focus under Operation Economic Outcast on both Iranian and non-Iranian persons who facilitate Iran-related financial activity or sanctions evasion. At a high level, the VTB Bank designation illustrates the heightened sanctions risks that may arise for foreign financial institutions providing banking channels to sanctioned Iranian institutions, while the BitBank action demonstrates OFAC’s increasing focus on digital assets and the infrastructure supporting their use.
We emphasize that the VTB Bank action is particularly relevant for non-U.S. financial institutions. OFAC expressly highlighted the increased sanctions risk for foreign financial institutions continuing to deal with VTB Bank following its Iran-related designation. We recommend that financial institutions with direct or indirect exposure to VTB Bank or other Iran-linked counterparties therefore consider the nature of those relationships and the potential application of relevant U.S. secondary sanctions authorities.
Generally, clients with potentially affected banking relationships, digital asset activities or other Iran-related exposure should continue to monitor developments under Operation Economic Outcast and assess the implications of new designations for their sanctions compliance frameworks. We will continue to provide updates on further action taken in relation to Operation Economic Outcast.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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