US Targets Russia's VTB Bank in Latest Escalation of Economic Sanctions Against Iran

The US on Monday imposed new sanctions on Russia's VTB Bank due to its financial ties to Iran, accusing the country's second-largest financial institution of helping Tehran to evade restrictions. These measures against the heavily sanctioned lender represent the latest US effort to isolate Iran's economy.

Treasury Secretary Scott Bessent has been actively urging European and Gulf partners to target the primary sources of revenue for the Iranian regime. Mr Bessent stated last week that the Treasury planned to sanction a "large bank," though he did not name the specific lender at the time.

“Under Operation Economic Outcast, Treasury will continue to target and disrupt those who provide material, technological or financial support that allows the Iranian regime to sustain its terrorist enterprise,” he said in a statement. “Treasury will not tolerate any support to the regime and will continue to identify, expose and isolate Iran’s enablers.”

Mr Bessent announced this latest target as part of US President Donald Trump's maximum pressure campaign against Iran last month. At the time, the Treasury Department stated it was also expanding its secondary sanctions campaign, threatening to cut off dollar access for institutions continuing to do business with Iran.

VTB had previously been placed under US sanctions in 2022 following Russia's invasion of Ukraine. According to the Treasury Department, VTB has moved to formalise closer banking co-ordination with Iran in recent years by opening bank offices in the country, helping to move billions of frozen assets, and creating a settlement system to boost bilateral trade.

Russia's VTB is the third financial institution hit by the US in this campaign. The Treasury Department has previously focused on Egypt's Banque Misr Branch in the UAE, alongside a Turkish bank and its subsidiaries. The UAE Central Bank announced on August 30 that it would conduct a “special and urgent examination” into the activities of these branches.

The Central Bank noted that it expects licensed lenders in the country “not to expose the UAE’s financial system to reputational risks, to respect the laws and regulations of the countries whose financial institutions are used in conducting transactions, and not to misuse the advanced financial infrastructure of the UAE.”

While the Treasury's actions did not impose full secondary sanctions on the bank, the department also targeted Iranian commercial airlines and other entities last week due to links with Iran's aviation sector, which Washington alleges Tehran uses to transport weapons, personnel, and illicit cargo.