US Treasury Imposes Sanctions on Iraqi and Iranian Banks Under 'Economic Isolation'

The US Treasury Department announced new sanctions targeting an Iraqi bank, Iranian banks, exchange houses, and financial and oil intermediaries, as part of "Operation Economic Outcast," which aims to cut off the funding sources used by Tehran to support its military forces and allied armed groups.

The department stated that the measures target financial networks used by Iran, according to the US statement, to transfer hundreds of millions of dollars through front companies, banks operating abroad, and specialized foreign currency brokers in various regions of the Middle East and Asia.

It confirmed that the sanctions aim to disrupt Iran's attempts to access the international financial system and limit its ability to circumvent US restrictions and finance its military and regional activities.

US Treasury Secretary Scott Bessent said: "The noose is tightening around the Iranian economy, and even Iran's alleged allies will not be able to save it."

He added: "The Treasury Department will not back down until the coffers of the Iranian regime are emptied and all remaining arteries of financing supporting its war machine are severed."

Sanctions on a Bank in Cuba

In parallel with the Treasury Department's actions, the US State Department announced the listing of "Banco Internacional de Comercio" (BICSA), headquartered in Cuba, on the sanctions list under Executive Order 14404 due to its operation in the financial services sector of the Cuban economy.

It noted that the bank had provided services to the sanctioned Iranian "Karafarin Bank" since at least 2022.

The US Treasury considered that the new measures, along with sanctions imposed on Iranian parallel banking networks, target the remaining financing channels the Iranian regime can use to support its economy and military forces.

It added that the sanctions reveal Tehran's reliance on complex financial structures and front companies abroad to bypass international restrictions.

The Treasury Department's measures are imposed under Executive Order 13902, which targets sectors of the Iranian economy, including the financial and oil sectors.

Operation "Economic Isolation"

The US Treasury Secretary had announced "Operation Economic Outcast" on August 24, 2026, under the name "Economic D-Day," with the goal of cutting off revenue sources relied upon by the Iranian regime.

According to the department, the operation includes identifying networks, intermediaries, and financial channels used in oil smuggling, sanctions evasion, money transfers, and terrorism financing.

It clarified that it coordinates with entities within the US government, the European Union, the United Kingdom, Gulf partners, and other parties to target Iran's illicit revenue sources.

It warned that institutions facilitating money laundering or sanctions evasion for Tehran may be denied access to the US financial system, noting the expansion of secondary sanctions scope and the acceleration of enforcement actions.

It confirmed that Iran relies, under comprehensive US sanctions, on parallel banking networks operating across several countries to generate revenue and transfer funds abroad.

It accused Tehran of using these networks to launder money, purchase weapons, access dollar-denominated banking transactions, and finance its affiliated armed groups.

In this context, it referred to financial institutions, including "Golden Global Bank," recently listed on the sanctions list, confirming continued efforts to deny these banks access to the US dollar.

Iraqi Bank in the Sanctions Crosshairs

Among the most prominent new measures, the US Treasury announced the listing of the "International Development Bank for Investment and Financing" (IDB), headquartered in Iraq, on the sanctions list, accusing it of facilitating financial transactions for Iran and providing access to the US dollar.

It stated that the bank misused its access to the dollar remittance auction, which was later cancelled, and maintained relationships with Iranian government entities and Iraqi armed groups aligned with Tehran.

It added that Iranian companies originally established the bank to support the Iranian economy and supply Iran with US dollars.

According to the department, the Iranian "Bank Melli," which was located next to the Iraqi bank, closed its doors due to US sanctions and transferred its capital to the International Development Bank.

It accused the bank of using Iranian capital in its commercial operations before transferring profits monthly to Iran in US dollars.

It also reported that the current management of the bank acquired ownership from a financier holding dual Iranian and Iraqi citizenship, who works for the "Quds Force" of the Iranian Revolutionary Guard Corps, noting that he still exercises influence over the bank through family ties.

The bank was listed under Executive Order 13902 due to its operation in the financial sector of the Iranian economy.

Iranian Banks Abroad

The sanctions included the companies "Jazeera International Bank" and "Chabahar International Bank Overseas," two Iranian banking institutions operating outside the country.

The Treasury explained that the first company is linked to "Bank Mellat," while the second is linked to "Bank Shahr."

According to the department, Iranian authorities allowed some banks to operate in free trade zones using foreign currencies, after obtaining approval from the Central Bank of Iran and the Supreme National Security Council, aiming to facilitate sanctions evasion.

The two companies were listed under Executive Order 13902 due to their work in the Iranian financial sector.

Iranian Oil Broker and Money Transfer Networks

The sanctions also targeted Iranian citizen Sayed Rouhollah Razavi, whom the Treasury described as one of the most prominent oil brokers relied upon by the Iranian regime to sell oil and repatriate its revenues.

It noted that Razavi, residing in Dubai, is the son-in-law of the leader of the hardline Iranian "Paydari Front."

The department said that key sources of Iranian revenue are controlled by influential figures in the regime, referring to the maritime shipping empire belonging to Mohammad Hossein Shamkhani, son of Ali Shamkhani, the late advisor to the Iranian Supreme Leader, and the extensive overseas real estate holdings of Ali Ansari, whom it described as one of the most prominent supporters of Mojtaba Khamenei.

According to the statement, Razavi worked closely with Sayed Naimai Badr al-Din Moussavi, whom Washington describes as a Hezbollah-linked financier and facilitator of Quds Force activities, and who was listed on the sanctions list on April 15, 2026.

The department reported that before the US embargo prevented Iranian oil exports, Razavi was responsible for shipping millions of barrels of oil monthly abroad for the National Iranian Oil Company and its subsidiary "Naftran Intertrade."

It accused him of using a network of shell companies, cash and gold money transfer brokers to convert oil revenues through Iran's secret banking system.

It clarified that funds were transferred via Hong Kong to the UAE and Turkey, where they were converted into gold and cash, before being smuggled aboard Mahan Air flights to Iran and its affiliated groups worldwide.

Razavi was listed on the sanctions list due to his work in the Iranian oil sector.

The sanctions also included the companies "Tejarat Gostar Atlas Parsian Kish" and "Farzangan Energy Pars," managed by Razavi, with the latter developing the "Farzangan" gas condensate refinery in Iran's Bushehr province.

The department said the listing of the two companies was due to their ownership or control by Razavi, or their direct or indirect work for him.

Seven Employees and a Company in Hong Kong

The Treasury Department announced the listing of seven employees at "Farab Sarogh Qesh" (FSAQ) company, linked to Iran's "Bank Shahr," on the sanctions list, following their involvement in foreign exchange operations related to the company.

The employees are Jila Mohammadi, Milad Katibi, Amir Thabeti, Nazanin Pourji, Fatemeh Vaseghi Meraji, Azadeh Abdolali Pour, and Farzad Allahyar.

According to the department, the company relies on foreign exchange experts to execute financial transactions for Iranian oil companies and brokers, including the National Iranian Oil Company, "Triliance" petrochemicals, and "Sepehr Energy Jahan Nama Pars" company, controlled by the military establishment.

It added that the company's employees coordinate fund transfers through the "Rahbar" network using shell companies in Hong Kong and the UAE.

The sanctions also included "Elitesphere Trading Limited," headquartered in Hong Kong, which the department said was used to transfer funds through the "Rahbar" network to support sanctions evasion operations.

Exchange Houses and Additional Names

The measures extended to a number of Iranian exchange houses, including "Hosseini Parsa Exchange House," owned and managed by Sayed Abbas Hosseini Parsa and Khaled Mohyi Najjad.

The Treasury said the company helped execute financial activities for the "Rahbar" network of sanctioned Iranian banks, in cooperation with Sadeq Bavoi, who holds both Iranian and Dominican citizenship.

The department described Bavoi as a facilitator of Quds Force activities involved in money laundering and assisting in arms purchases for Iran.

It noted that he owns and manages "Bavoi General Trading" company, previously listed on the sanctions list for its role in coordinating payments of tens of millions of dollars for front companies run by the "Persian Gulf Petrochemical Industries Commercial Company" and "Triliance" petrochemicals.

It added that "Hosseini Parsa Exchange House" has a close relationship with "Bavoi General Trading," which used its official documents and approved papers to execute commercial operations.

Bavoi also owns and manages "Bavoi & Partners Exchange House" in Iran.

The sanctions also included "Najafzadeh Exchange House," owned and managed by Soroush Najafzadeh, Soheil Najafzadeh, and Mansoureh Mir-Mohammadi.

According to the department, the company executed financial transactions worth hundreds of millions of dollars for Iranian institutions, including entities linked to "Bank Mellat" and its "Rahbar" network, including "Tejarat Siraj Afrouz Kish" company.

Additionally, "Jalali Exchange House," owned and managed by Abu Al-Hassan Jalali and Ensieh Mala Mohammadi, was listed after the department accused it of facilitating payments of tens of millions of dollars for Iranian parallel banking networks and sanctioned entities.

The listings included "Elitesphere Trading Limited," and exchange houses Hosseini Parsa, Jalali, Najafzadeh, and Bavoi & Partners, as well as Soroush Najafzadeh, Soheil Najafzadeh, Abu Al-Hassan Jalali, Ensieh Mala Mohammadi, and Sadeq Bavoi, due to their work in the financial sector of the Iranian economy.

Sayed Abbas Hosseini Parsa and Khaled Mohyi Najjad were also listed due to their work for "Hosseini Parsa Exchange House," and Mansoureh Mir-Mohammadi due to her work for "Najafzadeh Exchange House," directly or indirectly.

Asset Freezing and Warning Against Secondary Sanctions

The Treasury Department confirmed that the measures result in the freezing of all property and interests of listed persons and entities located in the United States, or held or controlled by US persons, with mandatory reporting to the Office of Foreign Assets Control (OFAC).

It clarified that the prohibition also extends to entities owned 50% or more, directly or indirectly, by one or more listed persons, whether individually or collectively.

Except for licensed or exempt transactions, US regulations generally prohibit transactions involving the property of blocked persons, whether conducted by US persons or occurring within or through the United States.

The department warned that violating sanctions could lead to civil or criminal penalties for US and foreign persons, noting that OFAC can impose civil fines based on strict liability, without necessarily proving intent.

The prohibitions include providing funds, goods, or services to or for the benefit of listed persons, as well as receiving them from such persons.

Non-US persons are also prohibited from causing US persons to violate sanctions, knowingly or unknowingly, conspiring to do so, or participating in schemes designed to evade sanctions.

The department noted that individuals who provide information about sanctions violations to the US Financial Crimes Enforcement Network (FinCEN) whistleblower rewards program may be eligible for awards if their information leads to successful actions resulting in fines exceeding $1 million.

It also warned that foreign financial institutions that knowingly conduct or facilitate significant transactions for listed persons may face secondary sanctions, including prohibitions on opening correspondent accounts or payment accounts in US banks, or imposing strict conditions on maintaining them.

In conclusion, the Treasury Department affirmed that the strength of the US sanctions regime lies not only in listing individuals and entities but also in the possibility of delisting them according to law.