An Iranian bank on the US sanctions list cannot open the correspondent accounts a normal bank uses to pay for imports or receive payment for exports. The networks described here are how US agencies say that gap is filled. The method is old in outline, because settlement between brokers in different countries is what hawala does, but the documents record a more organised form of it, built around registered Iranian firms and a large supply of paper companies abroad.
Everything on this page is what US Treasury and FinCEN say in their published releases. The designations are administrative findings by the agency that made them. They are not court judgments, and most of the persons named have not been heard in any proceeding that this site can cite.
The parts
The bank and its rahbar. Treasury says Iranian banks that are cut off from the international system rely on private companies it calls rahbars, and that these manage thousands of overseas shell companies used to execute payments for Iranian imports and exports. A rahbar is tied to one bank. FinCEN’s May 2026 alert adds that Iranian banks have established rahbars to manage clients’ international transactions, and that they use exchange houses to establish the front companies. Treasury’s April 2026 release names Farab Soroush Afagh Qeshm as the rahbar of Shahr Bank, and says it oversees the movement of funds for the bank’s clients through foreign front companies.
The exchange house. An exchange house is a licensed foreign exchange business. The Iran-based ones named in the releases are described as family-run general partnerships whose partners are liable for the funds the banks entrust to them. Treasury separates them from rahbars: where a rahbar serves one bank, an exchange house often serves several banks and exporters, and keeps its own foreign front companies. Treasury’s May 2026 release also says Iran primarily settles oil sales in Chinese yuan, which is why exchange houses matter: they convert those revenues into currencies the military and its partners can use more readily.
The front companies. These are the part visible to a bank outside Iran. Treasury says the exchange houses use front companies mainly in Hong Kong and the UAE, which it describes as easy to establish and subject to less scrutiny, to make or receive payments in dollars and other currencies for sanctioned persons in Iran. FinCEN’s data, covered in the data note, shows the same two places at the centre.
How a payment moves
The releases describe the steps in different places, and read together they give this sequence.
- A buyer abroad owes money for Iranian oil or petrochemicals. For oil allocated to the IRGC-Qods Force, Treasury’s July 2025 release says refineries pay front companies, which move the funds on to other front-company accounts.
- Money is sent to a front company’s account. Treasury’s August 2026 release says one Dubai exchange-house front generated invoices on the letterhead of a shell company chosen to receive the money, and then coordinated payments through that shell’s bank accounts.
- The funds are then paid on to other front companies, often several. FinCEN’s advisory notes that one front company may act for several sanctioned entities and may both receive and send funds, and that by using accounts outside Iran sanctioned entities may transact without ever bringing the funds back to Iran.
- Where dollars are needed, FinCEN’s advisory says third-country exchange houses rely on regional banks that have correspondent relationships with US banks, converting the foreign currency to dollars with forged documents that falsify the source of funds.
- The exchange house holds balances for its bank customers. Treasury’s August 2026 release says the Dubai front Titan Exchange held tens of millions of dollars on behalf of Shahr Bank as of early 2026, and a July 2026 release says two Iran-based exchange houses held tens of millions and hundreds of millions of dollars’ worth of foreign currency for their sanctioned bank customers.
Treasury also describes concealment of identity at the first step. Its May 2026 release says the owners of two exchange houses concealed their Iranian backgrounds when registering front companies by listing citizenship obtained through investment, which let them set up companies and bank accounts in foreign jurisdictions with access to the international financial system.
What the designations describe
Four actions give most of the detail. Each is Treasury’s account of what it found.
| Date | Action | What it describes |
|---|---|---|
| 6 June 2025 | The Zarringhalam brothers | Three Iran-based exchange houses overseeing front companies in Hong Kong and the UAE; 17 Hong Kong and five UAE front companies designated; Treasury says 11 of the Hong Kong fronts, used by two of the exchange houses, engaged in hundreds of millions of dollars of activity in dollars and euros |
| 28 April 2026 | Shahr Bank’s rahbar network | Farab Soroush Afagh Qeshm and its front companies, including three UK-based companies, one of which Treasury says transferred over $70 million for crude oil on behalf of the National Iranian Oil Company through 2024 |
| 7 August 2026 | Titan Exchange and Alps International | Dubai exchange-house fronts for Shahr Bank, with shell companies in Hong Kong and Singapore used for transaction orders; Treasury says Alps International enabled hundreds of millions of dollars of transactions in 2026 |
| 15 October 2026 | Four Iran-based exchange houses and an Iraqi bank | Exchange houses processing payments for sanctioned banks and their rahbars; an Iraqi bank that Treasury says gives Iran access to US dollars; two Iranian “offshore” banks authorised to operate in foreign currency in free trade zones |
The same few places recur across the four: Dubai and Hong Kong most often, and, less often, Singapore, Türkiye, the UK and Iraq.
Why the UAE and Hong Kong
Treasury’s stated reason is that these places make it easy to form a company and subject it to less scrutiny, and that front companies are created in jurisdictions with lower levels of supervision to avoid scrutiny of their business or ownership. FinCEN adds a banking reason: its data show Hong Kong companies that use Chinese non-resident accounts, and UAE general trading companies registered in free trade zones, as the most commonly used fronts.
As on the third-country bank accounts page, that is a description of where the structures sit, not a judgment on either economy. The UAE and Hong Kong pages set out why both appear so often in enforcement records.
How it is caught
The red flags are about shape. FinCEN lists, for shadow banking, a customer whose payments move through several exchange houses and trading companies with fees and patterns that do not fit commercial practice; an exchange house near Iran that uses forged documents to hide who the parties are; incoming wires with no or incomplete information on the source of funds; a UAE free-zone general trading company with opaque ownership and counterparties mainly in Singapore and Hong Kong; and a Hong Kong company banking through a Chinese non-resident account, with little web presence or co-located with similar companies, which is new yet sends large payments to UAE general trading companies for no clear reason.
Concentration. FinCEN’s analysis of reported transactions found 166 Iran-linked companies behind 95 per cent of the activity. A bank that has identified one front company can use shared addresses, owners, counterparties and names to find others.
Lookbacks. Several of FinCEN’s case studies describe companies “that OFAC later designated”. A designation changes the status of past payments, so the way to catch the pattern is to run past transactions against each new list. That is the control tested in the untested screening controls technique.
The reporting that makes the data. All of this rests on suspicious activity reports filed by banks, which is why FinCEN asks them to include a key term from its advisory or alert in the filing. The financial intelligence unit sees across banks what no single bank can.
What this does not establish
A designation is Treasury’s finding, not a judgment, and the releases describe amounts as “hundreds of millions” or “tens of millions” without showing the underlying records. The FinCEN figures come from reports of suspicious activity, which FinCEN itself says are not a complete picture. The networks adapt, and the actions named above are the ones Treasury chose to publish. Nothing here shows how much of Iran’s trade passes through such networks, and no document cited on this site claims to.