U.S. Treasury expands Iran sanctions with Iraqi bank action

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US expands Iran sanctions

Highlights

U.S. Treasury designates Iraq-based International Development Bank and two Iran-based offshore banks for facilitating U.S. dollar access and sanctions evasion for Iran.
Sanctions target Iran’s oil and shadow banking networks, including individuals, companies, Hong Kong-based Elitesphere Trading Co., Limited, and foreign-exchange operatives alleged to move funds across the Middle East and Asia.
Operation Economic Outcast, launched August 24, 2026, expands secondary sanctions and enforcement threats for foreign institutions linked to Iran, escalating compliance and correspondent banking risks.

Sanctions target banking and oil networks

As reported by the U.S. Department of the Treasury, the action designates Iraq-based International Development Bank for Investment and Finance, or IDB, for operating in the financial sector of the Iranian economy under Executive Order 13902. Treasury says the bank provides financial facilitation services and U.S. dollar access for Iran, maintains ties to Iranian government entities and Iran-aligned militia groups in Iraq, and sends profits back to Iran in U.S. dollars each month.

Treasury also designates Iran-based Jazireh International Bank Company and Chabahar International Bank Overseas Company, which it describes as offshore banks approved to operate in foreign currency to support sanctions evasion. In parallel, the U.S. Department of State is designating Cuba-based Banco Internacional de Comercio S.A., or BICSA, under Executive Order 14404, with Treasury saying the bank has provided services to designated Iran-based Karafarin Bank since at least 2022.

The sanctions package also reaches Iran’s oil and shadow banking infrastructure. Treasury designates Iranian national Sayyed Ruhollah Razavi, described as a key oil intermediary, along with Tejarat Gostar Atlas Parsian Kish Company and Farzanegan Energy Pars Company, and adds a group of foreign-exchange operatives, exchange houses and Hong Kong-based Elitesphere Trading Co., Limited for their alleged roles in moving funds through shell companies and front networks across the Middle East and Asia.

Enforcement pressure rises for foreign institutions

Operation Economic Outcast, announced by Treasury Secretary Scott Bessent on August 24, 2026, is intended to sever what U.S. officials describe as Iran’s remaining economic lifelines. Treasury says the campaign is expanding sanctions risk for entities that continue to do business with Iran and will accelerate enforcement against money laundering, sanctions evasion and financing tied to oil sales and regional proxy activity.

Under the action, property and interests in property of designated persons that are in the United States or under the control of U.S. persons are blocked and must be reported to OFAC. Treasury says entities owned 50% or more by blocked persons are also blocked, while foreign financial institutions that knowingly facilitate significant transactions for designated persons may face secondary sanctions, including restrictions on correspondent or payable-through accounts in the U.S.

The move underscores Washington’s effort to isolate Iran from the international financial system by pressuring banks, exchange houses and intermediaries that help move revenue in dollars, cash or gold. For financial institutions and companies operating in the region, the latest designations raise compliance risks across cross-border payments, trade finance and correspondent banking relationships.

Our earlier article on how Middle East conflict is reshaping global trade described how repeated disruptions are pushing companies to redesign supply chains and shipping routes beyond short-term wartime fixes. It highlighted expectations that some of these costlier, more resilient adjustments could persist, with trade in the region remaining under pressure even as global trade growth is supported by demand for AI-related products.

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