US targets UAE bank branches over Iran financing
The Treasury Department has proposed cutting off a foreign bank's UAE branches from the US financial system and sanctioned individuals for facilitating Iranian shadow banking.
The U.S. Treasury Department has taken significant coordinated action to counter Iran's use of the United Arab Emirates financial system. The Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking under Section 311 of the USA PATRIOT Act, identifying five UAE-based branches of an Egyptian state-owned bank as a "primary money laundering concern." If finalized, the proposed "special measure five" would prohibit U.S. financial institutions from opening or maintaining correspondent accounts for these branches. FinCEN alleges the branches processed approximately $1.8 billion for Iranian shadow banking front companies. Concurrently, the Office of Foreign Assets Control (OFAC) designated a Dubai-based bank manager and a Hong Kong front company for supporting sanctioned Iranian financial entities. This multi-pronged action underscores heightened U.S. focus on sanctions evasion and money laundering through third-country jurisdictions. Financial institutions should review their correspondent banking relationships and due diligence procedures, particularly for transactions involving the UAE. Comments on FinCEN's proposed rule are due by October 1.