Treasury Proposes Cutting Banque Misr’s UAE Branches Off U.S. Correspondent Banking Over Alleged Iran Links

The U.S. Treasury Department on Friday proposed cutting Banque Misr’s five branches in the United Arab Emirates off from U.S. correspondent banking, alleging the branches processed about $1.8 billion for suspected Iranian shadow-banking front companies. The step, announced by Treasury’s Financial Crimes Enforcement Network, or FinCEN, is a Notice of Proposed Rulemaking under Section 311 of the USA PATRIOT Act, not a final action.

FinCEN said it identified 103 potential Iranian front companies that used Banque Misr UAE accounts to move roughly $1.8 billion between January 2024 and June 2026, including about $520 million in the most recent 12-month period within that window. Treasury said the proposed action is part of what it calls Operation Economic Outcast.

If finalized, the rule would impose what FinCEN calls special measure five, the strongest of the Section 311 tools. That would prohibit covered U.S. financial institutions from opening or maintaining correspondent accounts for, or on behalf of, Banque Misr UAE. It also would require U.S. banks to take reasonable steps not to process U.S.-based transactions involving Banque Misr UAE and to apply added due diligence to certain foreign correspondent accounts.

Treasury stressed that the proposal applies only to Banque Misr’s five UAE branches, not to the broader bank. Banque Misr is an Egypt-based, state-owned commercial bank wholly owned by the Egyptian government. FinCEN explicitly excluded the bank’s operations in Egypt and other countries from the proposed designation. The comment period will close 30 days after the proposal is published in the Federal Register, meaning the measure could still be revised before any final rule is issued.

Section 311 allows Treasury and FinCEN to identify a foreign bank, institution or jurisdiction as being of “primary money laundering concern” and to impose restrictions on its access to the U.S. financial system. In practical terms, cutting off correspondent banking access can sever a foreign bank’s route to U.S. dollar payments used in cross-border transactions. FinCEN has used the authority before, including in a 2019 final rule involving Iranian financial institutions.

Treasury and FinCEN say Iran relies on shadow-banking networks — including exchange houses and front companies in third countries such as the UAE and Hong Kong — to move money through the international financial system. In Friday’s announcement, Treasury said it assesses that Banque Misr UAE is “a critical node for the Iranian regime’s access to U.S. dollars.”

The proposed rule says Banque Misr UAE accesses U.S. dollars through three direct correspondent relationships with U.S. financial institutions, though the notice does not publicly identify those banks. To illustrate the alleged conduct, FinCEN cited Alpa Trading FZCO, for which it said Banque Misr UAE processed more than $32 million between 2024 and 2025. Treasury had previously designated Alpa in September 2025. FinCEN also said the branches processed more than $29 million for Naba Alzaki Raw Materials Trading LLC between March and July 2025; the Office of Foreign Assets Control designated that company in July 2026.

Treasury Secretary Scott Bessent said in the department’s announcement, “We are taking the first step in holding it accountable for its continued, egregious support of the Iranian regime.”

The Banque Misr UAE proposal was the centerpiece of Friday’s action, but Treasury also said OFAC took separate steps the same day, including sanctioning Reza Mohammad Taeedi, described as the manager or general manager of Bank Melli’s Dubai branch, and Kameng Trading Limited, a Hong Kong front company that Treasury said helped launder funds for a designated Iranian exchange house network.