US sanctions Iraqi bank, Iranian offshore banks and exchange houses, and a Cuban bank over Iran
On 15 October 2026 Treasury designated an Iraq-based bank it says gives Iran access to US dollars, two Iranian offshore banks, an oil trustee and shadow banking operatives, while the State Department designated Cuba's Banco Internacional de Comercio.
The US Treasury's Office of Foreign Assets Control (OFAC) announced new designations on 15 October 2026 under Operation Economic Outcast, targeting what Treasury describes as Iran's international financial networks and shadow banking architecture. The designations were made under Executive Order 13902, which targets sectors of the Iranian economy, including the financial and petroleum sectors.
Treasury designated the Iraq-based International Development Bank for Investment and Finance (IDB). Treasury says IDB provides financial facilitation services and was initially established by Iranian companies to support the Iranian economy and supply Iran with US dollars. Treasury also designated two Iranian offshore banks: Jazireh International Bank Company, which it says is affiliated with Bank Mellat, and Chabahar International Bank Overseas Company, which it says is affiliated with Bank Shahr.
Treasury designated Sayyed Ruhollah Razavi, an Iranian national living in Dubai whom it describes as an oil trustee who moves oil revenue through shadow banking networks, along with two Iranian companies it says he manages. Other targets include seven employees acting for an affiliate of Shahr Bank, a Hong Kong company, Elitesphere Trading Co., Limited, and several Iranian exchange houses and their owners. Treasury says one exchange house, Najafzadeh Exchange, has processed hundreds of millions of dollars' worth of transactions, and another, Jalali Exchange, has facilitated tens of millions of dollars' worth of payments for Iran's shadow banking networks. Treasury describes Sadegh Bavi, a Dominican and Iranian national, as an IRGC-Qods Force facilitator and money launderer.
At the same time, the State Department designated Cuba-based Banco Internacional de Comercio S.A. (BICSA) under Executive Order 14404 for operating in the financial services sector of the Cuban economy. Treasury says BICSA has provided services to the designated Iran-based Karafarin Bank since at least 2022. All property of the designated persons in the US or controlled by US persons is blocked, and Treasury warns that foreign financial institutions that knowingly facilitate significant transactions for designated persons risk secondary sanctions, including restrictions on US correspondent or payable-through accounts.
Why it matters to AML professionals
This action targets banks and exchange houses, not only individuals, so correspondent banking and payments teams may hold direct or indirect exposure. The secondary sanctions warning means non-US banks also need to check whether they process payments for the newly listed names or their affiliates.
Red flags in this case
- Payments routed through third-country banks or exchange houses that have known links to sanctioned Iranian banks
- Front or trading companies in regional hubs moving funds with no clear commercial purpose
- Offshore affiliates of sanctioned banks appearing as counterparties under different names
- Correspondent relationships with banks whose ownership or capital traces back to a sanctioned jurisdiction
If this landed in your queue
- Screen customers, counterparties and correspondent relationships against the newly added names, including aliases and affiliates
- Review historical payments for links to the listed banks, exchange houses and the Hong Kong company
- Check for entities owned 50% or more by the designated persons, which are also blocked
- Escalate any matches for blocking or rejection and the required reporting to OFAC
Key terms
- Shadow banking network
- A network of exchange houses, front companies and brokers that moves money for sanctioned parties outside normal, transparent banking channels.
- Secondary sanctions
- Measures aimed at non-US parties, such as foreign banks, that deal with sanctioned persons, for example losing access to US correspondent accounts.
- 50 percent rule
- OFAC treats entities owned 50% or more, directly or indirectly, by blocked persons as blocked too, even if they are not named on the list.
Interview angle
A payment involves a bank in a third country that you later learn is newly designated for giving Iran access to US dollars. What do you do?
Explain stopping the payment, confirming the match, blocking or rejecting as the rules require, reporting to OFAC within the deadline, and then reviewing past activity and related parties for wider exposure.
Sources
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