US sanctions Egypt's second-largest bank over Iran ties
Priyanka Shankar
The US has moved to cut Banque Misr's UAE branch off from the US financial system, accusing Egypt's second-largest bank of facilitating transactions for Iran. The penalty, proposed by FinCEN, would bar the branch from dollar dealings and US market access, sparking reactions from Cairo and Abu Dhabi.
The US has announced it will remove Banque Misr's branch in the United Arab Emirates (UAE) from the US financial system, accusing Egypt's second-largest bank of transactions with the Iranian government.
US Treasury Secretary Scott Bessent said in a statement on Friday that the move is part of efforts to “cut off every remaining economic resource Tehran has” and warned that “those who enable Iran cannot continue to access the US dollar and the global financial system.” He added: “Banque Misr UAE has chosen to confront us, and today we take the first step to hold it accountable for its continued blatant support for the Iranian regime.”
Banque Misr, for its part, said on Saturday it is reviewing the US Treasury's notification.
What are the new financial restrictions?
On Friday, the US Treasury's Financial Crimes Enforcement Network (FinCEN) proposed a rule to revoke Banque Misr UAE's access to correspondent banking with US financial institutions. This means only the UAE branches of Egypt's second-largest bank would be unable to conduct US dollar transactions and lose access to the US financial market.
According to the US Treasury, Banque Misr UAE is considered a “critical link” helping the Iranian regime access the dollar. The agency estimates that “from January 2024 to June 2026, Banque Misr UAE processed approximately $1.8 billion for 103 companies potentially linked to Iran's shadow banking network.” The Treasury also accused Banque Misr UAE's clients of including “front companies used by Iran's Ministry of Defense and the Islamic Revolutionary Guard Corps (IRGC) to evade US sanctions, as well as money laundering for Iran's Supreme Leader.”
The proposed penalty is expected to take effect 30 days after the public comment period and does not affect other branches of the bank.
Reactions from Egypt and the UAE
Banque Misr said it is reviewing the US notification and noted that the measures “have a formal period to receive and study comments before a final decision.” The bank also said it would contact the US Treasury for further clarification and affirmed that its UAE branch continues to provide banking services under current regulations.
Egypt's Central Bank (CBE), along with the Foreign Ministry, has contacted US authorities on the matter. The CBE stressed that the measure is limited to Banque Misr UAE's dollar transactions with its correspondent bank and does not affect other banks in the Egyptian banking system, including Banque Misr's operations in Egypt or other overseas branches.
For its part, the UAE Central Bank announced on Sunday that it has decided to conduct an “extraordinary and urgent” inspection of Banque Misr's branches in the UAE, including a thorough review of the period cited in the US statement.
Who else is the US targeting?
In addition to Banque Misr, the US Treasury's Office of Foreign Assets Control (OFAC) also imposed sanctions on Reza Mohammad Taeedi, director of the Dubai branch of Bank Melli Iran, accusing the bank of facilitating billions of dollars in transactions for the IRGC's Quds Force. The US also sanctioned Hong Kong-based Kameng Trading Limited for allegedly “helping sanctioned Iranian individuals access the international financial system.”
Background of the “Operation Economic Outcast” campaign
The move comes as the US steps up economic pressure on Iran with a campaign US officials call “Operation Economic Outcast” aimed at isolating Tehran. On August 24, the US announced new sanctions targeting at least 60 entities in the Middle East, Asia, and Europe, in what it called an “economic landing.”
According to analysts, after nearly six months of conflict with Iran, the US has seen little impact from military operations, prompting the Trump administration to shift to economic sanctions. However, analysts believe these measures are unlikely to force Iran to make concessions.
Iran has dismissed the latest US sanctions. Iranian government spokesperson Fatemeh Mohajerani said the government and President Masoud Pezeshkian will “lead the country through this phase with wisdom and determination.” Meanwhile, IRGC spokesman Sardar Mohebi argued that the US resorting to economic warfare is evidence of Washington's failure on the battlefield. A researcher at the Center for Strategic Studies in Tehran remarked that Iran “has a PhD in evading sanctions” and will overcome these new measures.
