On August 24, 2026, Treasury Secretary Scott Bessent said the U.S. is launching a new campaign to isolate the Iranian regime, warning that countries and companies that do business with Tehran will face the wrath of the Trump administration. As a first step in its campaign to put further pressure on Iran, OFAC expanded Section 1(a)(i) of Executive Order 13902 of January 10, 2020 (“Imposing Sanctions With Respect to Additional Sectors of Iran”) (“E.O. 13902”) to include the aviation, digital asset, gold, shipping, and technology sectors of the Iranian economy.
In its original version, E.O. 13902 imposed sanctions applicable to any person determined by the Secretary of the Treasury to operate in the construction, mining, manufacturing, and textiles sectors of the Iranian economy. Sanctions were later expanded to include the Iranian financial sector. Iranian and non-Iranian persons operating in these sectors of the Iranian economy or sectors of the Iranian economy identified in the future could be subject to sanctions.
Now, any person determined to operate in the additional aviation, digital asset, gold, shipping and technology sectors will be subject to sanctions pursuant to section 1(a)(i).
Secretary Bessant further stated that “these actions today mark the beginning of a sustained and systematic campaign to close every financial resource that supports the leading state sponsor of terror.” He added: “Treasury has mapped the networks, facilitators, and financial channels that Iran uses to smuggle oil, evade sanctions, and fund terror. Working with our partners across the U.S. government, Treasury will be uncompromising in targeting any source of the regime’s illicit revenue.”
Immediate Implementing Action
To immediately add pressure to Iran’s ability to finance its operations, on August 28, 2026, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a proposed regulation that “finds the five United Arab Emirates-based branches of Banque Misr (collectively, Banque Misr UAE) to be of primary money laundering concern and proposes imposing a special measure to:
- prohibit U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, Banque Misr UAE;
- require U.S. financial institutions to take reasonable steps not to process a transaction for the correspondent account in the United States of a foreign banking institution if such a transaction involves Banque Misr UAE; and
- require U.S. financial institutions to apply special due diligence to their foreign correspondent accounts that are reasonably designed to guard against their use to process transactions involving Banque Misr UAE.”
Treasury found that Banque Misr UAE processed approximately $1.8 billion for 103 companies that are potentially part of Iranian shadow banking networks. Banque Misr UAE’s customers include apparent front companies used by Iran’s Ministry of Defense and the Islamic Revolutionary Guard Corps to evade U.S. sanctions, as well as to launder money on behalf of Iranian Supreme Leader Mojtaba Khamenei.
FinCEN’s proposed action against Banque Misr UAE would cut off a key financial lifeline and sanctions evasion vehicle for the Iranian regime. Its action is based on Section 311 of the USA PATRIOT Act codified at 31 U.S.C. 51A.
Under Section 311 the Treasury Secretary may “prohibit, or impose conditions upon, the opening or maintaining in the United States of a correspondent account or payable-through account” for or on behalf of a foreign banking institution, if such correspondent account or payable-through account involves the financial institution operating outside of the United States found to be of primary money laundering concern.
Why Issue a Proposed Rule Versus Immediately Sanctioning Banque Misr UAE?
Egypt and the UAE are political allies of the U.S. Banque Misr is the second largest bank in Egypt and has a significant presence in the UAE through its five UAE branches. A harsh and immediate sanction on Banque Misr UAE could have a significant adverse impact on the Egyptian economy. The UAE has critical diplomatic ties with the U.S. and a proposed regulation provides time for both Egypt and the UAE to investigate the charges against Banque Misr UAE and resolve any issues it might have with the new U.S. initiative. An immediate sanction of Banque Misr UAE could upset the relations among key countries at a time when both Egypt and the UAE are playing a significant role in the Iran conflict.
During the comment period Banque Misr can continue to have correspondent relations with U.S. banks that are critical to its international operations. To reflect the effort of the countries to continue to work together, The Central Bank of Egypt and the Central Bank of the UAE have issued a joint statement pledging their “full and continuous cooperation and coordination” regarding Banque Misr’s UAE branches. “The branches will take all necessary actions and measures within the period specified under the U.S. regulatory process….”
Key Takeaways
Treasury has knowledge of the entities and individuals who are helping Iran finance its international terrorism activities. Once it has evidence of sanction violations, OFAC typically acts to punish the violator through fines, blocking of funds, prohibition of the use of U.S. or foreign financial institutions or other tools. In this case, where political and diplomatic sensitivities exist, it has chosen to use a carrot instead of a hammer to achieve the objective of increasing pressure on Iran to reduce its ability to finance terror.
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.
[View Source]
