US hits Egyptian bank branches with Iran sanctions as war marks six months

By Daphne Psaledakis and David Lawder

WASHINGTON, Aug 28 (Reuters) – The U.S. imposed Iran-related sanctions on an Egyptian bank on Friday, part of Treasury Secretary Scott Bessent’s campaign to increase economic pressure to try to break a stalemate six months into Washington’s war with Iran.

Treasury said it moved to cut off Banque Misr’s branches in the United Arab Emirates from dollar transactions for its dealings with Iran. In a statement, it said its Financial Crimes Enforcement Network (FinCEN) proposed a rule that would revoke Banque Misr UAE’s correspondent banking access to U.S. financial institutions. 

The action, teased by Bessent on Monday as a “major announcement” of a secondary sanction on an international bank, was first reported by the Financial Times.

“Treasury promised to sever every economic lifeline Tehran has left and finally end the threat of the Iranian regime,” Bessent said in a statement. “We also warned that Iran’s enablers cannot continue to enjoy access to the U.S. dollar and the global financial system. Banque Misr UAE decided to find out the hard way, and today, we are taking the first step in holding it accountable for its continued, egregious support of the Iranian regime.”

Egypt’s central bank said on Friday that the U.S. action only affected Banque Misr’s UAE branches and did not extend to any other Egyptian banks. The Central Bank of Egypt said in a statement that it and Egypt’s Ministry of Foreign Affairs were in contact with the U.S. authorities about the measures.

A Treasury official also said the action only applies to Banque Misr’s UAE branches, allowing the bank to continue dollar transactions through its head office in Cairo and other foreign branches. These include Paris, Frankfurt, Riyadh, Beirut and Djibouti, according to Banque Misr’s website. 

Treasury’s Office of Foreign Assets Control separately issued sanctions targeting the manager of Iran’s Bank Melli branch in the UAE as well as a Hong Kong entity that it said helped launder money for a sanctioned Iranian exchange house.

Banque Misr UAE did not immediately respond to a Reuters request for comment on a public holiday. The sanctioned Bank Melli branch manager, Reza Mohammad Taeedi, also did not immediately respond to a Reuters email requesting comment.

‘CRITICAL NODE’ FOR DOLLARS

The U.S. Treasury said it views Banque Misr’s six UAE branches as a “critical node” for the Iranian government’s access to U.S. dollars.

The department said it estimates that between January 2024 and June 2026, Banque Misr UAE processed approximately $1.8 billion in transactions for 103 companies that are potentially part of Iranian shadow banking networks.

U.S. State Department spokesperson Tommy Piggott said in a statement that Bank Melli has served as a critical financial hub for Iran’s armed forces, including the Islamic Revolutionary Guard Corps-Qods Force and the Ministry of Defense and Armed Forces Logistics, both entities under U.S. sanctions. 

Iran has urged other nations not to join new U.S. sanctions.

(Reporting by Daphne Psaledakis and David Lawder; additional reporting by Ismail Shakil; writing by Susan Heavey; editing by Michelle Nichols and David Gregorio, Kirsten Donovan)