Reported by FinCEN

(Summary featured below. To read full report, go to: https://www.fincen.gov/system/files/2025-10/FTA-Iranian-Shadow-Banking.pdf)

FinCEN’s latest Financial Trend Analysis exposes a vast global shadow banking operation that helped Iran skirt U.S. sanctions and funnel billions through the international financial system. Drawing from 2024 Bank Secrecy Act (BSA) data, the agency identified roughly $9 billion in suspicious funds tied to Iranian entities using front companies, exchange houses, and offshore networks to disguise oil and petrochemical revenues. These transactions allowed sanctioned organizations to access U.S. dollar correspondent banking channels—fueling Iran’s nuclear, military, and drone programs, as well as terrorist proxy groups.

The analysis reveals that shell companies played a pivotal role, responsible for about 56% of all identified flows, while oil-linked firms accounted for 44%, showing a tight nexus between illicit energy exports and sanctions evasion. Shipping and technology procurement firms were also flagged as conduits for moving high-risk funds and materials through seemingly legitimate channels.

The United Arab Emirates emerged as the central hub of this shadow network, hosting over $6.4 billion (71%) of related transactions, while Hong Kong and Singapore served as key secondary jurisdictions. FinCEN also detected over $534 million flowing directly through U.S. bank accounts or U.S.-affiliated foreign branches—highlighting how Iran’s hidden financing operations penetrate mainstream systems despite strict sanctions.

This report sends a clear message to global banks: the threat is systemic, state-backed, and increasingly sophisticated. FinCEN urges financial institutions to heighten monitoring of correspondent banking, offshore entities, and dual-use industries, particularly in trade finance and petrochemical sectors.

For compliance teams, this marks a turning point—shadow banking is no longer just a private sector loophole, but a geopolitical weapon. Strengthening AML and sanctions screening frameworks is no longer optional; it’s national security.