US moves to cut Banque Misr's UAE branches from dollar system over Iran ties

The Trump administration has proposed a new rule that would cut the United Arab Emirates branches of Banque Misr, Egypt's second-largest bank, off from the US financial system. The Treasury Department announced the measure on Friday, accusing the financial institution of acting as an economic lifeline for Tehran's leadership as the US military campaign against Iran enters its sixth month.

The proposed rule stops short of imposing full sanctions on the Egyptian bank. This approach signals a reluctance by the administration to penalise major trading partners that continue to do business with Iran, including China and India. Treasury Secretary Scott Bessent told reporters earlier this week that countries should be given an opportunity to shift away from Iran before facing retaliation, in a bid to avoid destabilising the global financial system.

The Treasury's action follows Bessent's announcement of a broader campaign to pressure nations that still engage with the heavily sanctioned Islamic Republic. In a statement, Bessent said Iran's enablers cannot continue to enjoy access to the US dollar and the global financial system. He added that Banque Misr's UAE operations had chosen to "find out the hard way" and that the department was taking the first step in holding it accountable for its continued support of the Iranian regime.

The rule is subject to a 30-day public comment period before it takes effect. On the same day, the Treasury's Office of Foreign Assets Control posted new sanctions on the bank manager of the Dubai branch of Iran's Bank Melli and a Hong Kong-based firm accused of helping launder funds for Iran.

Bessent is scheduled to attend Group of 20 finance ministers meetings next week, where he plans to meet individually with counterparts from major and developing economies to encourage participation in the economic isolation of Iran.