An Iraqi bank has been accused of helping Iran turn overseas financial transactions into a regular supply of US dollars, placing it at the centre of Washington's latest attempt to cut Tehran off from international banking.
The International Development Bank for Investment and Finance (IDB) was among the institutions sanctioned by the US Treasury Department on October 15. American officials allege that the bank, originally established by Iranian companies, used capital connected to sanctioned Iranian institutions to conduct business in Iraq before transferring profits back to Iran in dollars.
Treasury's account describes a financial arrangement that survived even as restrictions pushed Iranian banks out of conventional international payment channels. Bank Melli, already under American sanctions, allegedly transferred capital to IDB after its Iraqi operation closed. The US also accuses IDB of maintaining connections with Iranian government entities and Iran-aligned armed groups.
The Treasury Department's October 15 sanctions announcement extends well beyond the Iraqi lender. Sixteen individuals and ten entities were designated under Operation Economic Outcast, with the measures covering offshore banks, currency exchange businesses, oil intermediaries and companies accused of handling Iranian funds.
Iraq occupies a particularly sensitive position in the dispute. Its commercial and energy relationships with Iran coexist with a banking system that depends on access to international financial markets. Washington's action against IDB consequently creates fresh compliance concerns for institutions handling dollar transactions with Iraqi counterparties.
Two other institutions named in the sanctions are Jazireh International Bank Company and Chabahar International Bank Overseas Company. Treasury identifies them as Iranian offshore banks affiliated with Bank Mellat and Bank Shahr respectively, alleging that they were authorised to conduct foreign-currency operations designed to bypass financial restrictions.
The investigation also follows money generated from Iranian petroleum exports.
Sayyed Ruhollah Razavi, an Iranian businessman based in Dubai, was sanctioned over his alleged role in arranging overseas oil sales and returning the proceeds to Iran. Treasury claims his network moved funds through Hong Kong, the United Arab Emirates and Türkiye, converting some of the money into cash and gold before transferring it to Iranian interests.
Currency exchange houses were another target. Several businesses and their operators were accused of processing transactions worth tens or hundreds of millions of dollars on behalf of Iranian financial institutions. Their inclusion reflects Washington's attention to the intermediaries that continue moving money after conventional banking relationships have been restricted.
The financial measures follow an October 8 operation against 17 vessels in Iran's shadow fleet, including tankers accused of carrying Iranian petroleum to Asian markets. American enforcement has also extended to shipping movements in the Gulf of Oman, where a US fighter jet disabled a commercial vessel accused of breaching the Iran blockade.
Tehran has consistently opposed Washington's sanctions and maritime restrictions, describing the pressure campaign as an attempt to coerce foreign businesses and governments into abandoning trade with Iran. Iranian officials have maintained that diplomacy remains possible, although sanctions relief continues to be a central demand.
The latest designations impose asset-blocking restrictions and generally prohibit transactions involving US persons and the sanctioned parties. They also increase potential exposure for foreign financial institutions conducting certain dealings with designated entities.
Washington has identified the banks and intermediaries it believes are sustaining Iran's access to foreign currency. The harder test is whether governments and financial institutions across the jurisdictions named in the investigation will close those channels, particularly where Iranian trade remains economically important.
