On August 28, Treasury announced coordinated actions under Operation Economic Outcast targeting Iranian access to UAE banking channels. FinCEN issued a notice of proposed rulemaking pursuant to Section 311 of the USA PATRIOT Act finding “reasonable grounds exist for concluding” that the five UAE-based branches of an Egypt-based state-owned commercial bank are a financial institution of “primary money laundering concern.” FinCEN proposed imposing special measure five, which would: (i) prohibit U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, the bank’s UAE branches; (ii) require U.S. financial institutions to take reasonable steps not to process transactions involving those branches through foreign correspondent accounts; and (iii) require special due diligence on foreign correspondent accounts reasonably designed to guard against processing transactions involving the bank. FinCEN stated it identified 103 potential Iranian shadow banking front companies transacting approximately $1.8 billion through accounts at the bank’s UAE branches from January 2024 to June 2026, including approximately $520 million over the most recent 12-month period. The finding and proposed special measure apply only to the bank’s UAE operations and expressly exclude its Egypt-based operations and branches in other countries.

Separately, OFAC designated the general manager of a sanctioned Iranian bank’s Dubai branch pursuant to E.O. 13224, as amended, for acting on behalf of the bank, which has allegedly facilitated billions of dollars in transactions through accounts controlled by the IRGC “Qods Force.” OFAC also designated a Hong Kong-based front company pursuant to E.O. 13382 for aiding a sanctioned Iranian exchange house in laundering funds and accessing the international financial system. As a result, all property, and all interests in property, of the designated persons that are in the U.S. or in the possession or control of U.S. persons are blocked. Comments on FinCEN’s proposed rule are due by October 1.