Trump’s pressure campaign against Iran hits a blind spot in correspondent banking

The Trump administration is trying to squeeze Iran out of the global financial system, but a century-old feature of international banking is giving Tehran a route into U.S. financial infrastructure.

Each year, billions of dollars linked to Iran continue to move through clearing accounts at American banks, despite U.S. sanctions that broadly prohibit Iran-related financial activity. Iran reaches those accounts through overseas partners that maintain correspondent banking relationships with U.S. institutions.

Correspondent banking connects banks across borders and allows customers to access services in foreign financial systems through partner institutions. That structure has become a major obstacle to enforcing Washington’s Iran sanctions, because transactions can pass through foreign banks before reaching U.S. accounts.

The Treasury Department has recently warned foreign banks that process dollar transactions involving Iran through correspondent accounts in the United States. It has also urged American banks to intensify their monitoring of transactions linked to Iran. The department last month specifically targeted Egypt’s state-owned bank for helping Iran access the U.S. financial network.