Billions in Iran-Linked Funds Moved Through US Banks Despite Sanctions: WSJ Probe

WASHINGTON: Billions of dollars linked to Iran are passing through accounts at American banks each year despite sweeping US sanctions aimed at isolating Tehran from the global financial system, according to a Wall Street Journal investigation. Iran reportedly gains indirect access to dollar-clearing accounts through foreign banks that maintain relationships with US financial institutions. The transactions use correspondent banking, which allows banks to process cross-border payments for institutions without a direct US presence.

Iranian entities allegedly conceal their involvement through front companies, currency exchanges and business partners in China, the UAE and other jurisdictions. The US Treasury identified about $9 billion in Iranian-linked funds that moved through American banks in 2024.

The findings highlight enforcement gaps in the US sanctions system as the Trump administration increases economic and military pressure on Tehran.

On August 28, the Treasury Department proposed cutting off the UAE branch of Egypt's state-owned Banque Misr from US correspondent banking services, designating it a "primary money laundering concern." US officials said the branch had routed up to $1.8 billion through American correspondent accounts for companies potentially linked to Iranian shadow-banking networks.

The Treasury said Banque Misr UAE maintained dollar accounts with three US banks. Banque Misr said it was engaging with Treasury and complying with applicable legal and regulatory requirements.

The action was part of "Operation Economic Outcast", a campaign aimed at restricting Iran's access to international financial networks and penalizing foreign institutions that facilitate sanctions evasion.

US officials have warned financial institutions to watch for potential sanctions-evasion indicators, including unclear ownership structures, Hong Kong-registered companies using Chinese bank accounts and UAE-based entities with little visible commercial activity.

Iran has increasingly used the Chinese yuan and cryptocurrencies to reduce its reliance on the dollar but still depends on dollar transactions for some international trade and purchases. US sanctions generally prohibit American individuals and institutions from transacting with designated Iranian entities, while foreign banks and companies can face exclusion from the US financial system if they knowingly assist Tehran in evading sanctions. (IANS)

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