The Trump administration is expanding its Iran sanctions campaign beyond companies to include foreign banks that help Tehran move money through the global financial system.
The Treasury Department on Aug. 28 proposed cutting off five United Arab Emirates-based branches of Egypt’s state-owned Banque Misr from the U.S. financial system. The branches processed about $1.8 billion for 103 companies that Treasury says were potentially part of Iranian shadow-banking networks between January 2024 and June 2026, according to Treasury’s Financial Crimes Enforcement Network, or FinCEN, as discussed in a Wall Street Journal commentary published Sunday.
How Iran Moves Money
Shadow banking in this context refers to the network of shell companies, trading businesses and other financial channels used to move money while obscuring its connection to Iran.
The network operates across places including the United Arab Emirates and Hong Kong, helping move oil and petrochemical proceeds around U.S. sanctions. The targeted Banque Misr branches were among the foreign financial institutions connected to that flow, according to the report.
The latest action follows Treasury Secretary Scott Bessent’s broader “Economic D-Day” campaign against Iran’s financial network. The strategy includes targeting intermediaries outside Iran and threatens foreign institutions that facilitate money laundering with restrictions on access to the U.S. dollar system.
Bessent previously said, “Any entity that facilitates money laundering on behalf of Iran will be removed from the U.S. dollar system.”
Why China Is In Focus
China is becoming a bigger test for the campaign because of its role in Iran’s oil trade. China bought more than 80% of Iran’s exported oil in 2025, while the sanctions campaign has also reached companies in mainland China and Hong Kong without targeting a major Chinese bank.
Bessent has warned that countries maintaining economic ties with Tehran could face severe consequences. When asked whether the campaign would extend to China, he declined to provide specifics, saying, “many conversations are best to have in private.”
The Wall Street Journal commentary also points to another part of the oil trade. Iranian crude is frequently rebranded as Malaysian oil before being sold to Chinese buyers, according to the report. The commentary notes that China’s reported oil imports from Malaysia far exceed Malaysia’s own reported exports, which the author argues could signal additional sanctions-evasion activity.
China’s Banks Could Be Next
The Wall Street Journal commentary argues that Washington should consider targeting Chinese financial institutions, particularly Bank of Kunlun.
Bank of Kunlun is controlled by China National Petroleum Corp., or CNPC. The U.S. cut the bank off from correspondent banking in 2012, but the author argues that the measure was largely symbolic because the bank conducted relatively little dollar-based business.
Max Meizlish, the author of the commentary and a research fellow at the Foundation for Defense of Democracies who previously worked in the Treasury Department’s Office of Foreign Assets Control, argues that a full blocking sanction could put greater pressure on CNPC to decide whether supporting the bank is worth exposing its wider commercial interests to sanctions risks.
What Could Come Next
Meizlish also argues that Treasury could use Section 311 of the Patriot Act to impose greater scrutiny on oil- and petrochemical-related transactions showing signs of Iranian sanctions evasion. Those warning signs could include large round-dollar payments, rapid movement of funds, unclear business purposes, unusual use of exchange houses and discrepancies between payments and underlying trade records, according to the Wall Street Journal commentary.
The broader U.S. campaign already includes sanctions exposure across digital assets, technology, gold, aviation and shipping, while nearly 60 individuals, companies and vessels linked to Iran’s oil, nuclear, missile and cyber networks have been targeted.
The next question is how far the administration will go after the foreign financial infrastructure that helps Iran move its oil revenue, particularly in China and Hong Kong.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Recent Comments