Treasury adds Iran sanctions to Russia's VTB, warning foreign banks to cut ties

The U.S. Treasury on Monday layered an Iran designation onto VTB Bank Public Joint Stock Company, Russia's second-largest financial institution, which Treasury has said holds nearly 20% of the country's banking assets, and told every foreign bank still dealing with it to end the relationship. Nothing a U.S.-listed fund holds changes. VTB has been fully blocked for U.S. persons since February 24, 2022, and Russian equities have been uninvestable in U.S.-listed funds since dedicated Russia vehicles were frozen and later wound down.

What it adds is an Iran-program listing under Operation Economic Outcast, the campaign Treasury launched on August 24 to cut remaining financial ties to Iran, on a bank that already carried Russia secondary-sanctions risk. In June 2024, Treasury extended that Russia-program secondary-sanctions regime to all sanctioned Russian entities, including VTB, and updated the bank's file to flag its locations in Beijing, Shanghai, and New Delhi. A foreign bank clearing for VTB was already exposed. Treasury said Monday that institutions that keep the relationship after the Iran listing "are exposed to even more sanctions risk than before and should cut off those relationships immediately." The added bite is dollar access: Executive Order 13902 lets Treasury prohibit or tightly condition a foreign bank's U.S. correspondent or payable-through accounts if it knowingly handles significant transactions tied to designated Iranian sectors.

Treasury said VTB had built correspondent relationships with sanctioned Iranian financial institutions over the past three years, had begun taking steps to increase its presence in Tehran in January 2025, and had "taken steps to move billions of frozen Iranian assets" through a settlement system in Iranian rials and Russian rubles. OFAC's same-day file added a Tehran address to an entry that already listed VTB locations in Beijing, Shanghai, and New Delhi, the China and India offices Treasury flagged in June 2024 when it warned foreign banks that dealing with those locations carried secondary-sanctions risk.

Monday's file carried no wind-down general license for the overlay. Four days earlier, OFAC had said Iran-related specific licenses would be presumed denied except where required by law or for life, limb, or environmental safety. Treasury said the designation follows recent actions against banks in Turkey and the UAE: Golden Global Bank, designated September 4, and Banque Misr UAE, where FinCEN on August 28 proposed cutting U.S. correspondent access. Secretary of the Treasury Scott Bessent said 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." The next step that would reach a bank still dealing with VTB is those same tools: an OFAC designation, or a FinCEN proposal to bar the institution's own U.S. correspondent accounts.