US Targets Iran Shadow Banks and Warns of Diverted Charity Funds
An Iraqi bank and Iranian currency networks face US restrictions. A separate financial alert addresses diverted donations and preserves access for legitimate charities.
The US Treasury Department on October 15 designated 16 people and 10 entities under its Iran sanctions authority, extending pressure on networks it accuses of moving oil proceeds and supplying foreign currency to Tehran.
Why the entity count needs a boundary
The same sanctions list update includes an eleventh entity, Cuba's Banco Internacional de Comercio S.A. That bank was designated separately under a Cuba authority. Treasury says it had provided services to Iran's Karafarin Bank since at least 2022. Including it produces a total of 11 entities; the Iran action itself covers ten.
Those ten include Iraq's International Development Bank for Investment and Finance, Iran's Jazireh and Chabahar offshore banks, and Hong Kong's Elitesphere Trading. Iranian exchange houses and companies connected to oil intermediary Sayyed Ruhollah Razavi complete the list. The Iran designations use Executive Order 13902; the Cuban bank action uses Executive Order 14404.
How the financial networks work
In Treasury's account, shadow banking connects ordinary financial institutions, currency dealers and companies that obscure the ultimate customer. Oil revenue can pass through several accounts and jurisdictions before returning as spendable dollars, cash or gold. The purpose is to bypass restrictions that would obstruct a direct transfer to a sanctioned Iranian institution.
Treasury accuses the Iraqi bank of providing dollar access for Iran and alleges that Razavi used intermediaries in Hong Kong, the United Arab Emirates and Türkiye to move oil earnings. It links his work to a financier associated with Hezbollah and the Islamic Revolutionary Guard Corps' Quds Force. These are allegations supporting administrative sanctions.
“The noose is tightening around Iran’s economy, and not even Iran’s so-called allies can save it,” Treasury Secretary Scott Bessent said.
A separate alert on religious donations
FinCEN, Treasury's financial intelligence bureau, issued its own October 15 alert about potential Iranian abuse of religious charity networks. It addresses diversion of donations, including khums, the religious contribution paid by members of Shiite communities. It does not treat that practice itself as evidence of wrongdoing.
Warning signs include fundraising without apparent charitable services, large donations from unidentified sources followed by substantial onward transfers, efforts to evade reporting requirements, and payments to an unrelated recipient who then withdraws or forwards the money.
FinCEN urges institutions to assess the full circumstances because no single indicator establishes suspicious activity. It also emphasizes that legitimate charities should retain access to financial services through transparent channels.
What the restrictions change
The sanctions block designated parties' property in the United States or controlled by US persons. They also cover entities owned at least 50 percent by blocked parties, individually or collectively. Transactions involving that property are generally prohibited for US persons or within or transiting the United States, unless licensed or exempt.
OFAC issued a limited licence allowing the winding down of transactions involving the Iraqi bank through 12:01 a.m. Eastern Daylight Time on October 30. Payments to blocked parties must enter blocked accounts. The authorization is not a general reopening of business with the bank.
Two tools in one pressure campaign
Treasury places both measures within Operation Economic Outcast, announced on August 24. The designations identify particular financial intermediaries and impose restrictions. The charity alert instead helps institutions recognize transaction patterns requiring closer examination. Applying those different tools accurately means tracking both the recipient of the money and the route it takes.
