The U.S. Treasury Department sanctioned the United Arab Emirates branch of Banque Misr, Egypt's second-largest bank, for allegedly processing $1.8 billion for 103 companies linked to Iran's shadow banking network. The move, announced by Treasury Secretary Scott Bessent, targets the bank's role in facilitating transactions for Iran's Ministry of Defense and the Islamic Revolutionary Guard Corps.

Banque Misr UAE, which has operated in the Emirates for 40 years, faces restrictions on its correspondent banking access to U.S. financial institutions. The sanctions aim to pressure global banks to tighten scrutiny of Iran-linked transactions, leveraging the "private sector chilling effect" of financial penalties.

Egyptian officials expressed concern over the potential fallout, as Banque Misr is a state-owned pillar of the national economy. The bank plays a critical role in processing remittances from Egyptians working in the Gulf, a key source of foreign currency for a country already grappling with economic pressures.

Experts note that while the sanctions target only the UAE branch, the broader implications could deter other financial institutions from dealing with Banque Misr, potentially amplifying economic strain in Egypt. The Treasury's action underscores the escalating U.S. campaign to isolate Iran financially.