The latest

The US Treasury plans to revoke US financial access for Banque Misr’s branches in the United Arab Emirates, cutting them off from dollar transactions as the Trump administration escalates economic pressure on Tehran. Announced Friday, the action targets the UAE operations of Egypt’s second-largest bank and represents the first measure since Treasury Secretary Scott Bessent declared “Economic D-Day” against Iran and its financial partners on Monday.

Details

• Account restrictions: US financial institutions would be barred from opening or maintaining a correspondent account for or on behalf of Banque Misr UAE. They would also have to take reasonable steps not to process transactions involving the bank through US correspondent accounts held for foreign institutions.
• Public process: The proposal is subject to a 30-day public comment period before taking effect. The regulatory route is less sweeping than full sanctions but would close the branches’ route into the US banking system.
• Transaction estimate: Treasury estimates that from January 2024 to June 2026, Banque Misr UAE processed about $1.8bn for 103 companies potentially belonging to Iranian shadow-banking networks. Washington says Iran uses such networks to evade sanctions, launder illicit oil revenue and obtain foreign currencies.
• Bessent’s warning: Bessent said Treasury had promised to sever Tehran’s remaining economic lifelines and warned that Iran’s enablers could not retain access to the dollar and global financial system. He accused Banque Misr UAE of “continued, egregious support” for the Iranian regime.
• Related designations: Treasury also imposed sanctions on the general manager of the Dubai branch of Iran’s Bank Melli and a Hong Kong-based company. The US accuses the company of helping launder funds for a sanctioned Iranian entity.
• China question: Chinese purchases of Iranian oil through a shadow fleet and money-laundering network account for about 45 per cent of Iran’s government budget, the US-China Economic and Security Review Commission said. Vice-chair Michael Kuiken said effective measures would require directly targeting Chinese companies or banks.
• Escalation limits: Experts and former Treasury officials said Washington has avoided major Chinese banks because retaliation could cause global financial shockwaves. Bessent said the US did not “want to blow up the global financial system”, while former Treasury official Max Meizlish described the rollout as traditional sanctions designations.

Background

The campaign comes six months into Donald Trump’s war effort, which has neither dislodged Iran’s regime nor forced nuclear concessions, while disrupting the global economy. AAA puts regular US petrol at $4.10 a gallon, versus $3.21 a year ago. Shipping through the Strait of Hormuz also remains below prewar levels after Iran shut most traffic under threat of attack.

What’s next

The 30-day comment period must conclude before the restrictions take effect. Next week, Bessent will host G20 finance ministers in North Carolina, with Washington’s effort to intensify economic pressure on Iran on the agenda.