US threatens global banks with sanctions over Iran deals

The US Department of the Treasury has warned financial institutions across China, Hong Kong, the United Arab Emirates (UAE), and Oman over their alleged involvement in transactions linked to Iran, a letter reviewed by Associated Press notes.

Washington signaled that banks operating in these jurisdictions could face punitive measures, including secondary sanctions, as part of an intensified economic pressure campaign targeting Tehran. In its letter, US authorities accused Iran of routing financial transactions through foreign institutions, particularly in Hong Kong and the UAE, via networks of front companies.

The Treasury Department said these mechanisms have enabled Iran to retain access to the global financial system despite long-standing US sanctions, describing the activity as “illicit.” It further alleged that Iran processed at least $9 billion through US correspondent accounts in 2024, using front companies with significant activity concentrated in Hong Kong and the UAE.

In a statement posted on X, the Treasury Department warned that financial institutions “should be on notice that the department is leveraging the full range of available tools and authorities and is prepared to deploy secondary sanctions against foreign financial institutions that continue to support Iran’s activities.”

Secondary sanctions allow Washington to target non-US entities, extending the reach of American financial restrictions beyond its borders and increasing pressure on international banks to comply with US policy.

Separately, concerns have been raised about the wider economic consequences of the ongoing conflict involving the United States, Israel, and Iran. A senior official at the World Bank warned of mounting global risks.

Managing Director Paschal Donohoe said the institution is “extremely concerned” about the spillover effects of the war on inflation, employment, and food security, particularly in vulnerable regions across Asia and Africa.

He said the World Bank is working with member states alongside the International Monetary Fund and the International Energy Agency to coordinate responses to the crisis. “At the moment, we are consulting with many governments and countries in relation to what their needs will be, and I would anticipate within the next number of weeks that will become far clearer,” Donohoe said.

The conflict, which erupted following what the report described as unprovoked US and Israeli strikes on Iran on February 28, has escalated into a broader regional confrontation affecting global energy flows and trade routes.

Tehran has effectively restricted access through the Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas shipments pass. Iranian authorities have said access is being managed in coordination with select countries, allowing certain shipments to continue while restricting those linked to US and Israeli interests.

The disruption has contributed to rising global energy prices, supply chain strains, and economic pressure across Asia, with countries including Pakistan, Indonesia, and Bangladesh introducing fuel-saving measures amid mounting financial strain.

By Vafa Guliyeva