Banking and Finance Law Daily Wrap Up, CRIMES AND OFFENSES—FinCEN proposes rule to revoke Banque Misr UAE correspondent banking access, (Aug 31, 2026)

By Justin Marcus Smith, J.D.

The proposed “special measure five” applies only to Banque Misr UAE, a foreign bank FinCEN found to be a “critical access node” to the U.S. dollar (USD) for Iranian illicit finance and a “primary money laundering concern.”

The U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking on August 28, 2026 for revocation of Banque Misr UAE’s correspondent banking access to U.S. financial institutions. A revocation like this, based on a finding of “primary money laundering concern,” is referred to as “special measure five” pursuant to section 311 of the USA PATRIOT Act, 31 U.S.C. § 5318A(a)(1). FinCEN stated it is undertaking the proposed rule and special measure five against the bank as part of Operation Economic Outcast, the larger U.S. effort to isolate Iran. According to a FinCEN press release, FinCEN found the five United Arab Emirates branches of the bank to be of “primary money laundering concern.” The proposed rule will not apply to the bank’s Egyptian parent bank, Banque Misr. Comments on the proposal are due by October 1, 2026.

FinCEN described Banque Misr UAE as a commercial bank that offers a range of retail and wholesale banking purposes through five branches in the UAE. It falls within the meaning of a “financial institution” for purposes of section 311 of the PATRIOT Act. FinCEN’s proposal continued that FinCEN found Banque Misr UAE to be a “significant conduit for Iranian shadow banking” relative to bank assets insofar as it allegedly helped 103 potential Iranian shadow banking front companies transact about USD 1.8 billion from 2024 through June 2026. The notice described three alleged Iranian front companies at length. Without “fulsome insight,” FinCEN said it assumed a portion of the bank’s activities are legitimate. The Egyptian parent bank, Banque Misr, is “expressly excluded from the definition of ‘Banque Misr UAE’ for purposes of” the proposed rule. Special measure five will therefore not apply operations outside the UAE or to the Egyptian parent bank.

The proposed rule to apply special measure five would prohibit U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, the bank. Among other things, the rule would require U.S. financial institutions to:

1. take reasonable steps not to process a transaction for a correspondent account in the United States of a foreign banking institution if such a transaction involves Banque Misr UAE; and

2. to apply to their foreign correspondent accounts special due diligence that is reasonably designed to guard against their use to process transactions involving Banque Misr UAE.

FinCEN assessed that Bank Misr UAE “serves as a critical access node to the U.S. dollar (USD) for Iranian illicit finance, putting U.S. national security at risk and undermining the integrity of the U.S. financial system.” The Islamic Republic of Iran is already subject to comprehensive U.S. sanctions and is itself subject to special measure five with respect to correspondent accounts for, or on behalf of, Iranian financial institutions under section 311. FinCEN said additional recordkeeping or reporting requirements would not have been enough to safeguard the U.S. financial system from the “illicit behavior” facilitated by Banque Misr UAE.

The notice further described how Iran “relies on multi-jurisdictional ‘shadow banking’ networks to sell oil and other commodities abroad, launder the proceeds, fund weapons procurement and support regional terrorist proxies.” The shadow banking networks consist of Iran-based exchange houses and fronts that attempt to circumvent the exclusion of Iranian entities from using the U.S. dollar (USD) and financial system through U.S. correspondent banking accounts. FinCEN said the front companies are mostly registered in third-country jurisdictions like the UAE and the Special Administrative Region of Hong Kong to “obscure beneficial ownership, disguise the origin of funds, and enable movement of proceeds linked to Iranian sanctions evasion and other illicit activity.” FinCEN said it found, overall, about USD 9 billion in shadow banking that occurred through U.S. correspondent accounts in 2024.

FinCEN expects imposition of special measure five in this instance to result in new, incremental recordkeeping and disclosure burdens on certain covered financial institutions, as further described in the notice and as defined in 31 CFR § 1010.667. FinCEN estimates the special measure will affect more than 8,000 banks with a federal functional regulator (FFR); 365 banks without an FFR; over 3,000 broker-dealers in securities; 954 futures commission merchants (FCMs) and introducing brokers in commodities (IBCs); and over 1,000 mutual funds. Among other things, covered financial institutions are expected to document reasonable steps to ensure no transactions involving Banque Misr UAE are processed for a foreign correspondent account. FinCEN is requesting public comments until October 1, 2026.

The proposed rule also provided a section-by-section description of how FinCEN applied the statutorily mandated factors to arrive at the determination to apply special measure five. In selecting any special measure, the Secretary of the Treasury is to consult with the Chairman of the Board of Governors of the Federal Reserve System and “any other appropriate” federal banking agency; the Secretary of State; the Securities and Exchange Commission (SEC); the Commodity Futures Trading Commission (CFTC); the National Credit Union Administration Board (NCUA Board); and any other agencies or interested parties at the sole discretion of the Treasury Secretary.

Companies: Banque Misr UAE

RegulatoryActivity: BankSecrecyAct CrimesOffenses GCNNews