Treasury warns foreign banks of no-notice Iran sanctions

The US Treasury Department said on Monday, October 5, that foreign financial institutions still doing business with sanctioned Iranian banks could be sanctioned "at any time without advance notification." The alert tells banks to cut those ties right away and to watch for so-called shadow banking channels that, according to Treasury, Iran uses to get around US restrictions.ua+1

The warning is Washington's latest step to cut Tehran off from the dollar-based financial system. US officials have spent recent weeks pressing other countries to end business with Iran.reuters

What the alert says

"Foreign financial institutions continuing to transact with sanctioned Iranian financial institutions could be targeted at any time without advance notification and should take immediate action to terminate such activity and relationships," the department said, according to Reuters.reuters

Treasury said banks that give Iran access to the global financial system face the risk of sanctions for operating in or supporting sanctioned parts of Iran's economy. That includes serving Iranian banks or their branches and subsidiaries in other countries. Such banks could also face civil and criminal penalties if Iran-related transactions cause US banks or other US persons to break sanctions rules. One possible penalty is a ban on opening or keeping US correspondent or payable-through accounts. Without those accounts, a foreign bank largely loses access to US dollar payments.reuters

Part of 'Operation Economic Outcast'

The alert builds on Operation Economic Outcast, a campaign Treasury launched in late August at President Donald Trump's direction. Treasury Secretary Scott Bessent said its goal was to "sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone." At the launch, Treasury expanded the types of Iran-related activity that can trigger secondary sanctions. It also issued determinations covering digital assets, technology, gold, aviation and shipping, and sanctioned nearly 60 entities, individuals and vessels. In its announcement, the department said every country would get "a defined timeline" to shut down the Iran-related activity it had identified, adding: "If they fail to act, Treasury will act."treasury

More measures followed. A determination targeting Iran's automotive and rail sectors took effect October 1. Washington also acted against banks in the United Arab Emirates and Turkey over their alleged help to Iranian authorities. On September 14, Treasury sanctioned Russia's VTB Bank over what it called involvement in helping Iran evade sanctions.businessupturn+2

Pressure on banks and regulators

On October 1, the Financial Crimes Enforcement Network, Treasury's financial crimes unit, issued an alert about the A7 Network. US authorities describe it as a Russia-linked money-laundering operation with ties to Iranian actors. A Federal Register notice published October 5 proposed new restrictions on transactions involving the network's sub-agents.businessupturn

The pressure has been building for months. In April, Treasury sent letters to financial institutions in China, Hong Kong, the UAE and Oman, threatening secondary sanctions over their dealings with Iran. Iran was already under heavy US sanctions before the war, and officials have now made clear that more penalties could come with no warning.wbaltv+1