Treasury moves to cut Banque Misr's UAE branches off the dollar

The U.S. Treasury's Financial Crimes Enforcement Network proposed a rule on Friday that would bar American banks from correspondent work with Banque Misr's branches in the United Arab Emirates. Treasury Secretary Scott Bessent called those branches a node in Iranian shadow banking. The action is the first public strike in a campaign he previewed earlier in the week to squeeze countries and firms that still clear business for Tehran, six months into the current U.S. war with Iran.

Banque Misr is Egypt's second-largest bank. The proposal does not sanction the Cairo head office or the bank's branches in Paris, Frankfurt, Riyadh, Beirut and Djibouti. It aims only at the UAE books. Officials said that between January 2024 and June 2026 those books processed about $1.8 billion for 103 companies that Treasury treats as possible Iranian front entities. Bessent's statement said Iran's enablers cannot keep dollar access and that Banque Misr UAE had decided to find out the hard way.

The legal hook is Section 311 of the USA PATRIOT Act, which lets Treasury brand a foreign bank a primary money-laundering concern and then restrict U.S. ties. The rule now faces a 30-day comment period. It is not a full blocking sanction on the Egyptian state lender. That distinction is the point. Washington is trying to punish a specific channel without picking a fight with Cairo or with the larger set of trading partners, including China and India, that still buy Iranian oil.

The same Friday, the Office of Foreign Assets Control listed the manager of Bank Melli's Dubai branch and a Hong Kong firm accused of moving money for Iran. State Department spokesman Tommy Piggott said Bank Melli has served the Islamic Revolutionary Guard Corps Qods Force and the Iranian defence ministry, both already under U.S. sanctions.

Bessent had told reporters that governments would get a chance to step away from Iran before secondary sanctions landed. Friday's notice is the first test of that warning. UAE regulators now have to decide whether to force Banque Misr's local branches to dump the accounts Treasury named. Egypt has to decide whether a limited U.S. rule against its bank's Gulf arm is tolerable. Iran's workaround machines, the exchange houses and front companies that have lived in Dubai for years, will look for the next door.

The $1.8 billion figure is Treasury's. It is large enough to justify a 311 action and small next to Iran's pre-war oil receipts. The more useful number is 103, the count of firms on the suspected list. If those names migrate to another Gulf book in a month, the rule will have moved the problem rather than closed it. If they cannot find a new dollar door, Bessent will have a template for the next bank he names.

For now the documented fact is narrower. A proposed U.S. rule, not yet in force, would isolate one Egyptian bank's UAE branches from correspondent dollars over alleged Iranian flows. Comments close in 30 days. The war is six months old. The financial map around it just gained a new line.