Billions in Iranian funds are passing through U.S. banks despite sanctions - WSJ

Billions of dollars connected to Iran flow through U.S. bank accounts annually, defying sanctions aimed at isolating Tehran from the global financial system, according to a Wall Street Journal report. According to Western officials and researchers, Iran manages indirect access to the U.S. financial system via foreign institutions with correspondent-banking ties to American lenders. Through front companies and currency exchanges, these transactions can be masked before reaching U.S. banks for settlement.

The U.S. Treasury identified approximately $9 billion in Iranian funds passing through American banks in 2024. As part of Operation Economic Outcast, Washington is ramping up pressure on financial institutions to scrutinize transactions potentially involving Iranian shadow-banking networks. On August 28, the Treasury targeted the UAE branch of Egypt's state-owned Banque Misr, restricting its ability to access U.S. correspondent accounts.

The branch allegedly routed up to $1.8 billion for companies potentially linked to Iranian networks, though the Treasury did not specify the U.S. banks involved.

Banque Misr's website lists JPMorgan Chase and Citigroup as its correspondent institutions, both of which declined to comment on the Treasury's action. Iran's network reportedly leverages shell companies and exchange houses in jurisdictions like Hong Kong and Dubai, enabling transactions to be settled in dollars without revealing their Iranian connections.

While this arrangement poses a challenge for Washington, overzealous restrictions could disrupt legitimate international payments and push Iran towards the use of alternatives to the dollar. Tehran has been increasingly reliant on China's yuan and cryptocurrencies to circumvent U.S. scrutiny, yet still needs dollars for certain trade, technology purchases, and other international transactions.