US Treasury: foreign banks working with Iranian banks will be sanctioned without warning

The US Treasury Department's Office of Foreign Assets Control (OFAC) issued a formal alert on Monday, 5 October 2026, stating that foreign financial institutions that continue to do business with the Islamic Republic or its financial sector are exposed to sanctions under a campaign Washington has named "Operation Economic Outcast". According to the notice, banks that transact with sanctioned Iranian banks may be targeted for sanctions at any time and without prior warning.

In the notice, the US Treasury called on foreign banks to cut off these transactions and relationships immediately. According to the agency, providing financial services to Iranian banks or their branches and subsidiaries in third countries may be regarded as operating in sanctioned sectors of Iran's economy. OFAC also warned that if Iran-related transactions cause US financial institutions or US persons to violate sanctions, foreign banks will also face civil and criminal penalties. Reuters also reported the alert.

Banks sanctioned earlier

According to the notice, US Treasury Secretary Scott Bessent announced the implementation of "Operation Economic Outcast" on 24 August 2026, and the scope of secondary sanctions under Executive Order 13902 was extended to Iran's digital assets, technology, gold, aviation and shipping sectors. After that, Banque Misr UAE's access to correspondent accounts in the United States was cut off; the Treasury had called the bank a key node for the Islamic Republic's access to dollars.

On 4 September, the US Treasury sanctioned Türkiye-based Golden Global Bank and its subsidiaries for carrying out tens of millions of dollars in transactions for the Quds Force of the Islamic Revolutionary Guard Corps (IRGC), and on 14 September it also placed VTB Bank, one of Russia's largest banks, on the sanctions list for establishing correspondent relationships with sanctioned Iranian banks.

Washington has warned the world's banks that continuing to work with sanctioned banks of the Islamic Republic could lead to them being sanctioned without any warning.

Shadow banking networks

In another part of the alert, OFAC says the Islamic Republic relies on networks of trusted individuals and front and shell companies to evade sanctions, laundering revenue from the sale of oil and other commodities in order to conceal its link to Iran. The agency has asked foreign banks to identify and stop these activities using earlier guidance from the US Financial Crimes Enforcement Network (FinCEN).

The alert was issued as Scott Bessent said the same day that the economic pressure campaign against the Islamic Republic has worked and the rial has fallen to its lowest level in history. Earlier, the dollar had passed 272,000 tomans on Tehran's open market, and the Islamic Republic's oil exports have effectively come to a halt under the US naval blockade.

Sources

• OFAC Alert: Notice to Foreign Financial Institutions Conducting Business with Iran
• OFAC Recent Actions, October 5, 2026
• Reuters via Finwire