New Delhi: The US Treasury Department has warned a number of banks in various jurisdictions, including Hong Kong, the United Arab Emirates, Oman and China, with the potential imposition of secondary sanctions for handling transactions related to Iran.
The letters, first reported by Fox Business Tuesday, inform the banks that the US Treasury Department has evidence that Tehran processed roughly $9 billion in 2024 through “US correspondent accounts using a series of front companies”, notably in Hong Kong and the UAE.
“I am writing to alert you that Treasury believes that a portion of these transactions, as well as additional transactions after 2024, were processed from banks you supervise through their US correspondents on behalf of direct customers linked to Iran,” the letter read.
“The Treasury Department encourages you to work with banks in your jurisdiction to identify any Iran-related financial activity, including through front companies and other evasive tactics, and immediately cease such activity in light of the significant illicit finance risks this activity poses. I have also shared this information with the US banks providing correspondent services so they may exercise enhanced vigilance over these transactions.”
The US Treasury Department’s warnings come as Washington looks to further curb Iran’s ability to export goods, such as crude oil—an economic lifeline for Tehran. The country’s economy has been struggling, with high inflation and a collapsing currency. Before the 40-day war, Tehran faced the largest protests against the government in years as citizens showed their unhappiness over the prevailing economic situation.
The 40-day war featuring US-Israeli strikes on Iranian infrastructure has made rapid economic recovery difficult for Iran. The US has also imposed a naval blockade against Iran in an attempt to prevent the country from exporting oil and importing necessary goods, as Washington looks for means to force Tehran into making a deal to end the conflict.
Iran exported roughly $30 billion worth of oil in the last year, which is a large part of its public revenue. China is the primary destination for Iranian oil. The latest US attempt to force Iran to make a deal comes after direct negotiations between the two countries last week in Islamabad did not reach a positive conclusion towards peace.
“The United States maintains a range of authorities that can be applied to instances of financial activity related to Iran. These include enforcement actions for sanctions violations that may involve a US person; secondary sanctions against foreign financial institutions for certain activities with Iran; and the ability to require enhanced due diligence and reporting on all transactions of a defined scope that are processed through the US financial system,” said the Treasury letter.
The letter added: “In addition, with the snapback of UN sanctions on Iran, and its history of trying to hide behind seemingly legitimate activity to engage in its illicit conduct, any activity with Iran could implicate UN sanctions.”
The Trump administration had also issued a sanctions waiver for the sale of Iranian oil already stranded at sea for a period of 30-days last month to stabilise the global energy markets. The waiver is set to expire on 19 April.
The US actions, including a naval blockade and warning banks in countries processing Iran’s trade transactions, indicate that the waiver is unlikely to be extended by Washington. Iran’s capability to effectively close the Strait of Hormuz for over 40 days has left global energy markets vulnerable.
Almost a fifth of global energy supply flows through the Strait of Hormuz. For India, almost half of its liquefied natural gas imports emanate from Qatar, which is located within the international waterway. Prime Minister Narendra Modi had a conversation with US President Donald J. Trump late Tuesday evening, where the two leaders discussed the importance of keeping the Strait of Hormuz “open and secure”.
(Edited by Nardeep Singh Dahiya)
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