Billions of dollars tied to suspected Iranian shadow-banking operations have passed through U.S. correspondent bank accounts, exposing a significant vulnerability as the Trump administration moves to further isolate Tehran from the American dollar and the international financial system.
A Treasury Department analysis identified approximately $9 billion in potential Iranian shadow-banking transactions that moved through correspondent accounts maintained at U.S.-based financial institutions during 2024. The findings were detailed by the Financial Crimes Enforcement Network, or FinCEN, in an October 2025 report.
Iran has been able to move money through the system by relying on foreign financial institutions with correspondent relationships with American banks. Front and shell companies operating in places including the United Arab Emirates, Hong Kong and Singapore have been used to obscure the Iranian connections behind transactions, according to FinCEN and The Wall Street Journal.
That financial channel has become a major target of Operation Economic Outcast, the sweeping campaign launched by Treasury Secretary Scott Bessent on Aug. 24 at President Trump’s direction. The initiative is intended to sever Iran’s remaining financial connections around the world and increase pressure on institutions that continue facilitating Iranian transactions.
Treasury took another step four days later, proposing to block the UAE branches of Egypt’s Banque Misr from maintaining correspondent banking access to U.S. financial institutions. FinCEN said Banque Misr UAE processed approximately $1.8 billion between January 2024 and June 2026 for 103 companies believed to potentially belong to Iranian shadow-banking networks.
The Egyptian state-owned bank maintained U.S. dollar accounts with three American financial institutions whose names were not disclosed by Treasury. Banque Misr’s website, however, identifies JPMorgan Chase and Citigroup among its correspondent banks, according to The Wall Street Journal.
JPMorgan Chase and Citigroup declined to comment. Banque Misr said it was working with Treasury and respects “relevant regulatory and legal frameworks,” while Egypt’s Foreign Ministry said it was in communication with American officials over the matter.
FinCEN’s move against Banque Misr UAE did not amount to a full sanctions designation against the bank.
Instead, the proposed measure must undergo a 30-day public comment period. If ultimately adopted, U.S. financial institutions would be barred from opening or maintaining correspondent accounts for Banque Misr UAE. The American banks involved in the transactions were not themselves targeted by Treasury.
Bessent said in a statement that “Iran’s enablers cannot continue to enjoy access to the U.S. dollar and the global financial system.”
The situation highlights a longstanding challenge for Washington in enforcing financial sanctions. More aggressive restrictions can increase pressure on targeted governments and institutions, but they can also encourage international businesses and trading partners to seek alternatives to the dollar, including the Chinese yuan and cryptocurrency.
“The more you use the tools, the more you create incentives for alternatives to the dollar,” Alex Zerden, a former Treasury official who founded Capitol Peak Strategies, told The Wall Street Journal.
Some financial experts contend that the effort to shut down Iranian shadow banking will remain incomplete unless American banks themselves are subjected to greater scrutiny and pressure.
Elaine Dezenski, a former senior Department of Homeland Security official who is now with the Foundation for Defense of Democracies, told The Wall Street Journal that shadow-banking systems are difficult to uncover but can still be traced. She said both U.S. banks and their correspondent institutions are “squarely on the hook.”
Gene Lange, who is performing the duties of Treasury’s undersecretary for terrorism and financial intelligence, similarly warned financial institutions that “are on notice,” telling The Wall Street Journal that compliance with the government’s requirements is not optional.
