Billions of dollars linked to Iran flow annually through the clearing accounts of US banks, despite sanctions designed to isolate Tehran from the global financial system, the Wall Street Journal reported on Saturday, citing Western officials and researchers.
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According to reports, Iran gains indirect access to the US financial system through foreign institutions that have correspondent relationships with US banks. Shell companies and money exchangers can conceal the Iranian origin of the funds before the dollar transactions reach US banks for settlement.
The scale of the problem is significant. According to the publication, in 2024, the US Treasury Department identified approximately $9 billion in Iranian funds flowing through US banks.
Washington is increasing pressure on financial institutions as part of Operation Economic Outcast, a campaign to isolate Iran economically. American banks have also been advised to strengthen controls over transactions potentially linked to Iranian shadow banking networks.
On August 28, the Treasury Department imposed restrictions on the UAE branch of Egyptian state-owned bank Banque Misr, cutting off its access to correspondent accounts in the US. According to officials, up to $1.8 billion was processed through this branch for companies potentially linked to Iranian networks.
The Treasury Department reported that Banque Misr’s UAE branch held dollar accounts at three US banks, but did not disclose their names. Banque Misr’s website lists JPMorgan Chase (New York: JPM) and Citigroup (New York: C) as correspondent institutions. Both banks declined to comment on the Treasury Department’s actions.
The Iranian network reportedly relies on shell companies and money exchanges in jurisdictions such as Hong Kong and Dubai. These entities may operate through foreign banks with correspondent relationships with US institutions, allowing them to conduct dollar transactions without disclosing the Iranian origin of the funds.
This arrangement presents Washington with a difficult enforcement dilemma. While increased oversight could make it more difficult for Tehran to move funds, strict restrictions on correspondent banking could disrupt legitimate international payments and encourage the wider use of dollar alternatives.
Iran is increasingly using the Chinese yuan and cryptocurrencies to evade US oversight, but it still requires dollars for certain trade transactions, technology purchases, and other international transactions.
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