US Imposes Fresh Sanctions on Russia's VTB Bank over Alleged Iran Ties

The ​United States imposed new sanctions on Russia's VTB Bank, opens new tab on Monday, accusing the lender of helping Iran evade ‌Western sanctions and warning that foreign institutions that continue doing business with Russia's second-largest bank could face additional penalties. Already cut off from the dollar system over Russia's invasion of Ukraine, VTB now faces Iran-related sanctions that Treasury officials said could expose foreign banks and businesses that continue to deal ​with it to additional penalties.

Treasury said VTB had opened offices in Iran, established banking relationships with sanctioned Iranian lenders ​and helped build financial channels designed to facilitate trade and financial coordination between Moscow and Tehran. The ⁠action, taken under an executive order aimed at increasing pressure on the Iranian economy, adds to U.S. sanctions already in place against ​VTB Bank that were imposed in February 2022 under an executive order following Russia's full-scale invasion of Ukraine. The Treasury said in a ​statement that state-controlled VTB was now "among the most comprehensively sanctioned financial institutions in the world." The Iran-related penalties would increase the risk of secondary sanctions against foreign institutions that continue to do business with VTB, the Treasury added.

"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,” Treasury Secretary Scott Bessent said ​in the statement. "Treasury will not tolerate any support to the regime and will continue to identify, expose, and isolate Iran’s enablers," it quoted him ‌as saying. The ⁠Treasury said that over the past three years, VTB has opened bank offices in Iran to expand trade between Russia and Iran and formalize closer bilateral financial coordination. It said that VTB has established correspondent banking relationships with sanctioned Iranian financial institutions, established a settlement system for Iranian rials and Russian roubles and has sought to move billions of dollars in frozen Iranian assets.

Bessent warned last ​week that President Donald Trump's ​administration would sanction a large ⁠bank as it continues to apply economic pressure on Tehran to try to end a more than six-month-old conflict with Iran and reopen the Strait of Hormuz energy shipping chokepoint. The United States ​has imposed a range of economic measures against Iran since the U.S. and Israel attacked it ​in February, targeting ⁠oil exports, shipping networks, weapons procurement channels, financial intermediaries, digital asset exchanges and aviation links. In recent weeks, the Treasury has hit a small Turkish investment bank with sanctions, cutting it off from dollar transactions, and imposed penalties that effectively do the same for United Arab Emirates branches ⁠of Egypt's ​Bank Misr. The Treasury also said it was meeting with global financial institutions ​to warn them about secondary sanctions risks and to "arm them with the information they need to shut down revenue streams and procurement networks tied to the Iranian ​regime, the IRGC, Iran’s terrorist proxies, and their enablers." - Reuters