U.S. banks may need to blacklist UAE branches of Banque Misr

• Key insight: Fincen has proposed a rule that would bar U.S. banks from working with Banque Misr's Emirati branches.
• Supporting data: Suspected Iranian shadow banking moved roughly $9 billion through U.S. correspondent accounts in 2024 alone, according to Fincen.
• Forward look: The comment period on the proposal closes Oct. 1, and no comments had been filed as of Tuesday.

Overview bullets generated by AI with editorial review.

The Treasury Department proposed Tuesday to bar U.S. banks from doing business with the Emirati branches of state-owned Egyptian bank Banque Misr, which it says served as a pipeline for Iranian money.

The proposal would impose the harshest measures available under the USA PATRIOT Act on five branches of Banque Misr in the United Arab Emirates. It appeared in the Federal Register Tuesday after the department announced it Friday.

The Financial Crimes Enforcement Network, or Fincen, identified 103 potential Iranian front companies that moved about $1.8 billion through accounts at those branches between January 2024 and June 2026, according to the proposal.

Fincen, the Treasury Department's financial crimes bureau, calls the companies "potential" front companies and "assesses" that the branches serve as a significant conduit, according to the proposed rule. No court has ruled on any of it.

The branches held about $6.4 billion in assets at the end of last year, according to their audited financial statements. Banque Misr's operations in Egypt and every other country besides the UAE are expressly excluded.

The Emirati branches of Banque Misr access the dollar through so-called correspondent relationships, in which a foreign bank has an account at a U.S. bank and can move money there.

The branches have correspondent accounts with three U.S. financial institutions, which Fincen did not name and that American Banker could not identify.

Besides closing the correspondent accounts at those three financial institutions, under the proposed rule, other U.S. banks would also have to take reasonable steps to block transactions involving the Emirati branches.

Specifically, U.S. banks would have to apply special due diligence across all their foreign correspondent accounts and notify any foreign correspondent they know or have reason to believe serves the Emirati branches that it may not give them access.

Suspected Iranian shadow banking moved roughly $9 billion through U.S. correspondent accounts in 2024 alone, according to the proposal.

How the money moves

For years, Iran has not been permitted to transact in the U.S. dollar directly. Comprehensive U.S. sanctions bar it from doing so, including a 2019 rule that closed U.S. correspondent accounts to Iranian financial institutions.

Instead, the country engages in what Fincen calls "shadow banking," in which a network of front companies, banks and money exchangers move funds around those controls on Iran's behalf, according to a Fincen trend analysis published in October 2025.

It starts with currency exchange houses inside Iran, which hold and move money for sanctioned Iranian banks.

Those exchange houses manage companies in Hong Kong and in Dubai free zones, which are business districts offering easy company formation, tax exemptions and limited liability. The companies exist to hide who is behind the money.

Sanctioned Iranian entities use front-company accounts outside the country to both receive and send payments, which may let them move money through the financial system "without ever repatriating funds to Iran," according to a Fincen advisory published in June 2025.

A U.S. bank enters at the last step. The front companies bank at regional institutions, and those institutions hold correspondent accounts at U.S. banks, according to the same advisory.

What reaches a U.S. compliance officer looks like recently incorporated companies moving unusually large sums, money moving quickly, payments between companies in unrelated lines of business and large round-dollar amounts, according to a Fincen alert published in May.

Within that shadow banking network, Banque Misr's Emirati branches handled about $520 million of the suspected activity in the most recent 12 months Fincen reviewed, according to the proposed rule.

Alpa Trading FZCO, an Emirati company the Treasury Department sanctioned in September 2025 over its work for a currency exchanger tied to Iran's defense ministry, moved more than $32 million through the branches in 2024 and 2025, according to the proposed rule.

The response, and what comes next

Banque Misr said Saturday that it is treating the proposal "with the utmost seriousness and attention" and will file a response within the comment period, according to a statement on its website.

The bank affirmed its adherence to all applicable laws and did not dispute any specific transaction Fincen describes.

The Central Bank of the UAE decided to run its own examination of the branches the day after the U.S. announcement.

It had "decided to conduct a special and urgent examination that includes a forensic/in-depth lookback covering the period referred to in the statement issued by the U.S. authorities, with a focus on banking transactions of the companies mentioned in the statement," the central bank said in a statement Saturday.

The central bank is also "studying the available options regarding the status of the bank" if the measure takes effect, according to the same statement.

Fincen, Banque Misr and the Central Bank of the UAE did not immediately respond to questions from American Banker.

Banks have until Oct. 1 to comment on the proposed rule. The prohibition would apply only if Fincen issues a final rule after reading the comments, and the proposal does not say when it would do so.

Fincen certified that the rule would not have a significant economic effect on a substantial number of small entities. Banks already run sanctions screening and suspicious-activity systems, and those systems "can easily be modified to adapt to this proposed rule," according to the proposal.

A banker who disagrees has until Oct. 1 to say so in official comments.