US sanctions hit Banque Misr UAE over alleged Iran ties
The US Treasury proposed cutting Banque Misr's UAE branches off from dollar correspondent banking, accusing Egypt's second-largest bank of processing roughly $1.8 billion for companies linked to Iranian shadow networks between January 2024 and June 2026. The measure targets only UAE operations—not Banque Misr in Egypt—and enters a 30-day public comment period before any final rule.
Washington framed the move as the first accountability step against an institution it calls a "critical node" for Tehran's access to US dollars. Treasury Secretary Scott Bessent said Iran's enablers "cannot continue to enjoy access to the US dollar and the global financial system." The announcement landed Friday as part of Operation Economic Outcast, the administration's escalating campaign to isolate Iran amid deadlocked truce talks roughly six months into the US-Iran conflict.
Key Takeaways
- FinCEN proposed revoking Banque Misr UAE's correspondent banking access to US institutions under Section 311 of the USA PATRIOT Act.
- Treasury estimates the UAE branches processed about $1.8 billion for 103 companies potentially tied to Iranian shadow banking.
- Egypt's Central Bank says the action is limited to Banque Misr UAE dollar transactions and does not affect other Egyptian banks or domestic operations.
- UAE and Egyptian central banks said Sunday they are coordinating and that UAE branches continue operating while regulators investigate.
- The proposed rule could take effect after a 30-day comment period and applies only to Banque Misr UAE, not other overseas branches.
What exactly did the US Treasury propose?
On Friday, the Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking that would bar US financial institutions from opening or maintaining correspondent accounts for Banque Misr UAE. US banks would also need to apply special due diligence to prevent transactions involving the Egyptian lender's Emirati operations from passing through American correspondent accounts.
In practical terms, Banque Misr's UAE branches would lose the ability to carry out dollar transactions through the US financial system if the rule is finalized. According to Al Jazeera, the punishment is expected to take effect 30 days after the public comment period closes.
Why is Washington targeting Banque Misr's UAE branches?
Treasury alleges Banque Misr UAE served as a channel for Iran to generate revenue abroad through multi-jurisdictional shadow banking networks. It said customers included front companies used by Iran's Ministry of Defence and the Islamic Revolutionary Guard Corps to evade sanctions, as well as to launder money on behalf of Iranian Supreme Leader Mojtaba Khamenei.
The action fits a broader Friday package. OFAC separately sanctioned Reza Mohammad Taeedi, general manager of the Dubai branch of Iran's Bank Melli, and Hong Kong-based Kameng Trading Limited, which Treasury said aided sanctioned Iranian persons in accessing the international financial system. Last week, Washington also sanctioned nearly 60 individuals and entities accused of helping Iran generate oil revenue, procure weapons, and conduct cyber operations.
How are Egypt and the UAE responding?
Banque Misr said Saturday it is reviewing the Treasury notice, studying the data "with the utmost seriousness," and contacting US authorities for further information. It noted the measures remain subject to the official comment period and said its UAE branch continues serving customers under applicable rules.
Egypt's Central Bank said Friday it was in contact with US authorities alongside the Ministry of Foreign Affairs, stressing the measure affects only Banque Misr UAE dollar transactions with correspondent banks. On Sunday, Reuters reported that UAE and Egyptian central banks issued a joint statement confirming coordination and pledging that Banque Misr UAE branches would take all necessary measures to conduct business as usual.
The UAE Central Bank launched a "special and urgent examination" of Banque Misr's UAE branches, including a forensic lookback covering the period cited by US authorities. Iran, for its part, rejected the latest sanctions, with Economy Minister Ali Madanizadeh saying they would fail.
What should customers and markets watch next?
The proposed rule is not yet final. FinCEN must complete its comment period before deciding whether to impose the special measure, and Banque Misr has signaled it will engage Treasury during that window. Analysts note Washington is leaning on economic pressure after military operations have shown limited impact on Iran's posture, though experts question whether sanctions alone can force Tehran to meet US demands.
For Egypt's wider banking sector, regulators have been explicit: domestic operations and other overseas branches are outside the scope of this action. Still, the case underscores how US Iran enforcement can reach through Gulf correspondent networks—and how quickly regional regulators must respond when a major Egyptian institution lands in the crosshairs.