On August 28, 2026, the Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking (NPRM) finding that the five United Arab Emirates-based branches of Egypt’s state-owned Banque Misr — collectively, “Banque Misr UAE” — are financial institutions of primary money-laundering concern. The proposed rule, issued under Section 311 of the USA PATRIOT Act, would prohibit U.S. financial institutions from opening or maintaining correspondent accounts for Banque Misr UAE and impose special due diligence requirements on foreign correspondent relationships that could be used to process transactions involving the bank. The action was announced alongside an OFAC press release as part of “Operation Economic Outcast,” a coordinated Treasury Department initiative designed to sever Iran’s economic ties worldwide.

What Is a Section 311 Special Measure?

Section 311 of the USA PATRIOT Act, codified at 31 U.S.C. § 5318A, grants the secretary of the Treasury the authority to find that a foreign jurisdiction, financial institution, class of transactions, or type of account is “of primary money laundering concern.” Upon making such a finding, the secretary may require domestic financial institutions to take one or more of five graduated “special measures” designed to safeguard the U.S. financial system from money laundering and terrorist financing risks.

Special Measures One through Four impose additional requirements for recordkeeping, information collection, and reporting. Special Measure Five — the most severe tool in the statutory toolkit — authorizes the secretary to prohibit or impose conditions on the opening or maintaining of correspondent or payable-through accounts for or on behalf of the designated institution. In other words, Special Measure Five entirely severs a foreign bank’s access to the U.S. financial system.

The Banque Misr UAE NPRM proposes Special Measure Five. FinCEN explicitly considered and rejected Special Measures One through Four, concluding that additional information collection or reporting obligations would be “ineffective and insufficient” given the nature of Iranian front-company operations, which are specifically designed to obscure the true beneficial owner.

A critical distinction for compliance teams: A Section 311 NPRM is not the same as an OFAC Specially Designated Nationals (SDN) list designation. SDN designations take immediate effect and block all property of the designated person. A Section 311 action follows an administrative rulemaking process — FinCEN publishes a finding and proposed rule, solicits public comments, and then may issue a final rule. Until the final rule takes effect, the prohibition is not legally binding. That said, the NPRM itself carries an unmistakable market signal, and prudent institutions will not wait for a final rule to reassess their exposure.

Context Within the Current Administration’s Sanctions Enforcement

The Banque Misr UAE NPRM represents another escalation in the Treasury Department’s campaign to disrupt Iranian sanctions-evasion networks under the second Trump administration. Since January 2025, Treasury has deployed Section 311 with increasing frequency as part of a broader maximum-pressure strategy targeting Iran-linked financial infrastructure in the UAE, Hong Kong, and other jurisdictions that host Iranian front companies.

Operation Economic Outcast, the coordinated initiative under which this action was announced, reflects Treasury’s focus on cutting off the financial nodes that enable Iran to sell oil, launder proceeds, procure weapons, and fund regional terrorist proxies, including the Islamic Revolutionary Guard Corps (IRGC) and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). FinCEN’s own analysis identified approximately $9 billion of potential Iranian shadow banking activity flowing through U.S. correspondent accounts in 2024 alone — a figure that underscores both the scale of the problem and the urgency of the government’s response.

The Banque Misr UAE NPRM — What Happened and Why

FinCEN’s finding rests on extensive analysis of Iranian shadow banking conducted between June 2025 and June 2026. The agency identified 103 potential Iranian shadow banking front companies that transacted approximately $1.8 billion through accounts at Banque Misr UAE from January 2024 to June 2026, including approximately $520 million in the most recent 12-month period. FinCEN assessed that Banque Misr UAE has a “concerningly high percentage” of potential Iranian shadow banking relative to its total assets of approximately $6 billion.

Three entities illustrate the nature of the activity FinCEN documented:

1. Alpa Trading FZCO – A UAE-based front company designated as a Specially Designated Global Terrorist in September 2025, facilitated funds for purchases on behalf of MODAFL and the IRGC. Banque Misr UAE processed over $32 million in transactions for Alpa between 2024 and 2025.
2. Naba Alzaki Raw Materials Trading LLC – The trading company was designated by OFAC in July 2026 for operating in Iran’s financial sector and was used by Khandan Exchange. This Iran-based exchange house had contracts with multiple OFAC-designated Iranian banks and held over $117 million in foreign currency on behalf of sanctioned institutions. Banque Misr UAE processed over $29 million for Naba between March and July 2025.
3. Midas Oil Trading DMCC – Identified in press reports as a key money-laundering entity on behalf of Iranian Supreme Leader Mojtaba Khamenei, Midas transacted over $1 million through Banque Misr UAE in January 2025.

The proposed rule targets all five Banque Misr UAE branches — two in Dubai, one each in Abu Dhabi, Sharjah, and Ras Al Khaimah. Egypt-based Banque Misr and its operations outside the UAE are expressly excluded from the designation. The NPRM provides a 30-day comment period following Federal Register publication. After considering public comments, FinCEN may issue a final rule imposing the prohibition.

Practical Guidance for U.S. Financial Institutions

For compliance officers and BSA/AML teams, the near-term implications are concrete. Do not wait for a final rule to act.

• Screen for direct exposure immediately. Banque Misr UAE maintains three direct correspondent relationships with U.S. financial institutions. If your institution holds one of these accounts, begin planning for orderly termination now.
• Review downstream correspondent relationships. The proposed rule requires covered financial institutions to take reasonable steps to avoid processing transactions involving Banque Misr UAE through the correspondent accounts of other foreign banking institutions. Assess whether any of your foreign correspondent account holders maintain relationships with Banque Misr UAE.
• Update transaction-monitoring systems. Add Banque Misr UAE and its five UAE branch locations to your screening and filtering tools. The NPRM contemplates that institutions may use existing OFAC-screening software to detect funds transfer orders referencing Banque Misr UAE as originator or beneficiary.
• Prepare notification letters. The proposed rule would require covered financial institutions to notify foreign correspondents known or reasonably believed to provide services to Banque Misr UAE that they may not provide the bank with access to the U.S. correspondent account. Draft these notices now so they are ready upon a final rule.
• Reassess broader Iranian shadow banking exposure. This NPRM is not an isolated action. Review your institution’s exposure to UAE-based front companies and exchange houses, particularly those with opaque ownership structures, high-volume foreign-exchange activity, or connections to the commodities trade.
• Document your risk-based response. FinCEN expects covered financial institutions to take a “risk-based approach” to due diligence. Document the steps your institution is taking — and the rationale behind them — in the event of future regulatory examination.

The Bottom Line

The Banque Misr UAE NPRM signals an escalation in the Treasury’s approach to Iranian sanctions evasion. The government is moving beyond designating individual bad actors to severing the institutional banking relationships that enable an entire illicit finance ecosystem to function. For U.S. financial institutions, the compliance obligation is not merely to screen against a new name — it is to understand the architecture of Iranian shadow banking and to ensure your correspondent banking network is not part of it.

Institutions that treat this NPRM as routine will find themselves behind the curve. The trajectory of sanctions enforcement under this administration is aggressive, accelerating, and squarely focused on the financial system. The cost of inaction is too high.