US moves to cut Egypt’s Banque Misr’s UAE branches off from the US financial system over aid to Iran

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The Trump administration is escalating its financial pressure on Iran by targeting Banque Misr, Egypt's second-largest bank, specifically regarding its branches in the United Arab Emirates. While this action does not constitute a formal sanction against the bank itself, the U.S. Treasury Department is moving to cut off these UAE branches from the American financial system and their ability to process dollar transactions. Washington accuses the bank of providing an economic lifeline to Tehran by facilitating illicit finance, money laundering, and sanctions evasion through opaque shell companies. This targeted approach aims to disrupt the billions of dollars that flow annually through UAE financial institutions on behalf of the Iranian regime, signaling that countries continuing business with Iran risk losing access to the global dollar system. The strategy relies on Section 311 of the USA Patriot Act, which allows the Treasury to designate specific branches for exclusion from U.S. clearing networks without sanctioning the entire institution. By focusing solely on the Dubai-based operations, the administration hopes to force these entities to implement robust compliance and due diligence measures to avoid further isolation. This move is designed to address the opacity of financial flows where Iranian funds are often hidden behind complex corporate structures rather than appearing as direct transactions between Iranian and UAE counterparts. The ultimate goal is to compel these banks to shut down accounts linked to Iranian shell companies, share financial intelligence with U.S. investigators, and broadly crack down on illicit finance typologies within their jurisdictions. The anticipated response from the UAE and Egypt involves immediate investigations into the flagged branches, with reports indicating that the UAE Central Bank is already conducting a look-back analysis to identify activities involving specific Iranian entities. Beyond the targeted branches, the U.S. expects a wider crackdown across other financial institutions in Dubai to prevent future sanctions evasion. However, experts warn that while halting commercial trade could constrain foreign exchange flows into Iran, it might also inadvertently create conditions for popular uprisings against the regime that lack U.S. support. The administration argues that cutting off these specific conduits is the only effective way to deprive the regime of resources needed to sustain itself and rearm, without causing unnecessary harm to the Iranian people. This action represents a broader campaign intended to clean up the global financial economy by addressing not just the Iranian threat but also other jurisdictions involved in illicit finance, such as Hong Kong's role in Dubai-related issues, Russian sanctions evasion, Chinese malign influence, and North Korean money laundering. By tackling these interconnected problems, the U.S. aims to establish a sustained effort that extends well beyond Iran to secure allied interests against various global threats. The message is clear: nations and banks that fail to adapt their compliance procedures to meet new U.S. standards will face severe retaliation, effectively ending their access to the dollar-based international financial system and forcing a fundamental shift in how illicit finance is managed globally.

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Well, Washington is continuing to turn up the financial pressure on Iran and this time it is targeting a bank in one of America's own strategic partners. The Trump administration is now moving to cut off the UAE branches of Bank Melli, that's Egypt's second largest bank from the US financial system. They're accusing the bank of helping provide an economic lifeline to Tehran and it's not technically new sanction, but the message is clear. Banks and countries that continue doing business with the Iran could risk losing access to the US dollar and global financial system. The move comes as Treasury Secretary Scott Bessent launches a broader campaign to pressure Iran's trading partners to cut their financial ties with Iran and joining us now from Washington is Max Mayzlish, a research fellow at the Foundation for Defense of Democracies Center on Economic and Financial Power. So, Max, how significant is this specific move against Bank Melli and what does it tell us about how aggressively the Trump administration is now targeting Iran's financial systems? >> The move from the US Treasury Department against this bank's branches in the UAE is a huge. For many, many months, if not longer, I and my colleagues at the Foundation for Defense of Democracies have been calling for such action. The reality here is that the UAE is a partner to the United States in many regards, but Dubai is also a problem. Specifically, when it comes to money laundering, terror financing, illicit finance and sanctions evasion. So, this is the first step in the campaign the United States is launching now against not only Iran, but truly these financial enablers that create permissive environments for Iranian sanctions evasion to sustain itself and produce billions of dollars for the regime. >> Right. Now, the US is stopping short of formally sanctioning this bank itself, but is specifically targeting its UAE branches and dollar transfers. So, why take this more targeted approach and what kind of impact do you think it's ultimately going to have? >> So, you know, we can get into a little into the weeds here. The authority is called Section 311 of the USA Patriot Act. And essentially what the Treasury Department is uh proposing to do is to cut off these uh five branches of the Egyptian bank in the UAE from the US uh financial system. That means we're cut off their ability to transact and and clear dollars. This is a huge step. It is a targeted but also escalatory step against a bank. Um because for a bank that relies on its access to dollars to clear funds in Dubai as a major hub for uh global financial flows, uh this could be, you know, catastrophic to their ability to continue operating. Um but what as we know from uh various reporting from the Treasury Department, um from the US Treasury's uh Financial Crimes Enforcement Network, we know that billions of dollars move through UAE financial institutions every year. And so, the reason for taking this approach is actually because so much of the illicit financial flows um are opaque in their nature, right? And so, we know that there's not just these apparent dealings between an Iranian entity and a counterpart in the UAE, but rather there's going to be opaque shell companies uh and uh these more opaque financial vehicles that are moving funds on behalf of the regime. And so, what Treasury wants to see from this bank isn't just for it to be some sort of punitive measure. Um what the Treasury wants to see is some sort of mitigating measures by uh these bank branches um ensuring that they have more robust compliance and due diligence so that we can actually see a change in the UAE and Dubai specifically more broadly um across all these financial institutions in Dubai, ensuring that they have more robust compliance procedures to catch these types of sanctions evasion and illicit finance typologies. >> Right. Very interesting. You know, Treasury Secretary Bessend is now warning countries that continue doing business with the Iran that they could face retaliation. Uh we're seeing that happen right now. This is one example of that. How can we expect the UAE and also Egypt to respond to this? >> So, already the UAE Central Bank uh is launching, uh according to recent reports, uh some sort of uh in-depth investigation into these uh branches uh located in Dubai, um where they will be doing look-back analysis, um specifically looking for activity involving some of the Iranian uh shell companies and Rahbar entities uh identified in Treasury's proposed action. Um and then so what we would want to see from them is closing down accounts, sharing financial intelligence um with US investigators and law enforcement entities to ensure that these pathways for Iranian sanctions evasion is going to be shut down. Now, that's specific for those branches that have been targeted by Treasury, but remember this is the opening shot by the US Treasury Department. And so, broadly speaking, what Treasury is going to want to see is more of a crackdown by the UAE more broadly across other financial institutions that have yet to be targeted. >> You know, I think what everybody wants to know is whether or not this D-Day approach is going to work, whether, you know, targeting all of the Islamic Republic's economic lifelines is going to lead to the fall of this regime. What do you think is going to happen? How do you think this is going to play out? Do you think it's going to work? >> Well, this is the only way that we can actually expect for the regime to be truly cut off of the financial flows that support its ability to sustain itself. Um we saw uh in recent uh days the UAE uh saying that it was going to halt ordinary commercial trade involving Iran. Um that's good if we want to constrain uh you know, foreign exchange moving into the country, but it also could create conditions for uh more popular uprising uh against the regime. My concern there is that we might be setting up a situation where the people are going up against the regime not supported by the United States and we'll see a repeat of history with violence against the Iranian people. And so the best thing that we can actually do is go after these conduits for illicit financial flows which only support the regime not not the Iranian people only support the regime and cut off their ability to rearm to engage in warfare and threaten US and allied interests. So this is the appropriate path forward and by the way it's important to highlight that this extends well beyond the threat of Iran, right? Hong Kong as a jurisdiction of illicit finance concerning Dubai in the same boat they are threatening US and allied interests not just with Iran but with respect to Russian sanctions evasion Chinese malign influence North Korean money laundering narcotics cartel trafficking all sorts of things, right? So by actually tackling this problem it's the first page in what I hope can be a more aggressive and sustained campaign that extends well beyond the Iranian threat and actually cleans up the global financial economy. >> Right.