Banque Misr, Egypt’s second-largest, hit by US sanctions: What to know

The United States has said it will cut off the UAE operations of Banque Misr from the US financial system after accusing Egypt’s second-biggest bank of doing business with the Iranian government. Banque Misr UAE decided to find out the hard way, and today, we are taking the first step in holding it accountable for its continued, egregious support of the Iranian regime,” he said. Banque Misr said on Saturday that it was reviewing the US Treasury’s notice.

The move, announced on Friday, comes as Washington has stepped up its efforts to economically pressure Iran, dubbed Operation Economic Outcast, amid the deadlocked truce talks. Last week, the US Treasury also imposed new sanctions on nearly 60 individuals and entities, targeting networks accused by Washington of helping Iran generate oil revenue, procure weapons and conduct cyber operations. Iran has, however, rejected the latest US sanctions, with Economy Minister Ali Madanizadeh saying they will fail.

So, what exactly is this financial limit on Banque Misr? On Friday, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed a rule that would revoke Banque Misr UAE’s correspondent banking access to US financial institutions. This means that only the UAE branches of Egypt’s second-largest bank will be unable to carry out transactions in dollars and will lose access to the US financial market.

In a statement on Friday, the Treasury said that Banque Misr UAE is a critical node for the Iranian regime’s access to US dollars. It added that it estimates that “between January 2024 and June 2026, Banque Misr UAE processed approximately $1.8bn for 103 companies that are potentially part of Iranian shadow banking networks”. The treasury added that in order to generate revenue abroad, Iran relies “on multi-jurisdictional shadow banking networks that provide key access to US dollar correspondent banking relationships”.

Banque Misr UAE’s customers include “front companies used by Iran’s Ministry of Defence and the Islamic Revolutionary Guard Corps to evade US sanctions, as well as to launder money on behalf of Iranian Supreme Leader Mojtaba Khamenei,” the Treasury said. The US government’s proposed punishment is expected to come into effect in 30 days after a public comment period, and will not impact any other branches of the bank. On Saturday, the bank said in a statement that it was reviewing the US Treasury notice.

It said the new “regulatory measures (by the US) are subject to an official period for receiving and studying comments before a final decision is made regarding them.” The bank added that it “is dealing with these measures and the data and estimates they contain with the utmost seriousness and attention, and is studying them thoroughly.” The bank announced that it will also contact the US Treasury Department for further information and until then, said its branch in the UAE continues to provide banking services to its customers in accordance with the applicable rules and procedures. Earlier, on Friday, the Central Bank of Egypt said that, together with Egypt’s Ministry of Foreign Affairs, it was in contact with US authorities on Banque Misr’s UAE branches. It does not affect any other bank within the Egyptian banking sector, including Banque Misr’s operations in Egypt or any of its other overseas branches,” it highlighted.