FinCEN Identifies $9 Billion in Potential Iranian Shadow Banking Activity in 2024

On October 23, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) released a Financial Trend Analysis (“FTA”) identifying approximately $9 billion of potential Iranian shadow banking activity in 2024, derived from reports submitted by U.S. financial institutions. FinCEN issues FTAs periodically to provide threat pattern and trend information based on Bank Secrecy Act (BSA) filings, pursuant to section 6206 of the Anti-Money Laundering Act of 2020 (AMLA).

The latest FTA builds on information previously issued in a June 6 FinCEN Advisory, which instructed U.S. financial institutions to remain vigilant regarding the Iranian regime’s illicit activities and attempts to exploit the U.S. financial system. This Advisory replaced FinCEN’s 2018 guidance on Iranian illicit operations and offered updated red flags, trends, and typologies for Iranian sanctions evasion, oil smuggling, shadow banking networks, and weapons procurement, aimed at assisting financial institutions in detecting, preventing, and reporting suspicious activity tied to Iranian illicit financial conduct.

The June 6 Advisory and the October FTA both underscore how Iran circumvents sanctions and generates illicit revenue to support nuclear weapons, ballistic missile, and unmanned aerial vehicle (UAV) programs. These efforts support the U.S. government’s “maximum pressure campaign” against Iran, announced in February 2025 via National Security Presidential Memorandum (“NSPM-2”). Concurrent with the June Advisory, the Treasury’s Office of Foreign Assets Control (OFAC) designated more than 30 individuals and entities linked to Iranian brothers Mansour, Nasser, and Fazlolah Zarringhalam, who were found to launder billions through the international financial system using Iranian exchange houses and foreign front companies as part of Iran’s shadow banking infrastructure. The full list of designations from the June 6 sanctions action is publicly available. This action represented the first round of sanctions specifically targeting Iranian shadow banking networks under NSPM-2, pursuant to Executive Order 13902, which imposed sanctions on additional Iranian economic sectors in January 2020.

To develop the FTA, FinCEN analyzed BSA information, including Suspicious Activity Reports (SARs), from 2024 transactions linked to potential Iranian shadow banking. The dataset was filtered to include only transactions of $500,000 or more and excluded any transactions that could not be corroborated with open-source or BSA information. The final dataset included 2,027 transactions totaling $9 billion in activity.

FinCEN’s analysis revealed the intricate financial and corporate structures Iran employs to sell sanctioned oil and petrochemicals internationally, launder proceeds, and procure export-controlled technology for military and nuclear programs. The analysis expanded on previous findings about how the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL) and the Islamic Revolutionary Guard Corps (IRGC) gain access to the global financial system, launder billions of dollars, and generate revenue through oil and petrochemical sales. MODAFL was most recently designated in 2019 for assisting IRGC Qods Force (IRGC-QF), which itself was designated in 2007 for supporting multiple terrorist organizations.

According to the FTA, Iranian shadow banking networks operate across continents, linking Iranian front companies—including oil, shell, shipping, investment, and technology procurement firms—that transact billions among themselves and with other entities. The networks have a significant presence in the United Arab Emirates (UAE), Hong Kong, and Singapore. These operations rely on exchange houses and other intermediaries to access U.S. dollars and the U.S. financial system through correspondent accounts, facilitating exports, laundering proceeds, and funding Iran’s military programs and support for terrorist groups.

FinCEN highlighted several key findings from its analysis. Foreign shell companies played the largest role in Iranian shadow banking, transacting approximately $5 billion in 2024. These entities, which displayed multiple indicators of shell activity such as no verifiable business operations, minimal internet presence, and use of shared addresses, sent $4.2 billion primarily from China-based non-resident accounts operated by Hong Kong entities and received $4.3 billion mostly from UAE-based shell companies. Dozens of oil companies, likely Iranian front entities, transacted $4 billion in 2024, mainly in the UAE and Singapore, potentially facilitating illicit oil sales. Potential technology procurement companies engaged in approximately $413 million in transactions linked to Iranian entities, likely supporting the acquisition of export-controlled technology. International shipping companies possibly transporting sanctioned Iranian oil were responsible for around $707 million in transactions, with most based in Iraq, UAE, or Hong Kong. Foreign investment firms potentially provided Iran with access to international investment markets, with UK and UAE companies transacting about $665 million in 2024.

FinCEN also identified potential exploitation of U.S. financial institutions. The $9 billion of shadow banking activity flowed through correspondent accounts at U.S.-based banks, including $534 million transferred from U.S. bank accounts to Iran-linked entities and $361 million via accounts with foreign branches of U.S. banks, alongside $174 million using accounts with foreign subsidiaries of U.S. banks. Additionally, the UK and Switzerland were identified as potentially vulnerable: UK-based companies transacted $540 million through UK- or Switzerland-based institutions, Switzerland-based companies transacted $115 million, and foreign firms transacted $503 million via Swiss financial institutions or Swiss branches of foreign banks.

The FTA includes case studies and infographics to illustrate these findings and is publicly accessible online at: https://www.fincen.gov/system/files/2025-10/FTA-Iranian-Shadow-Banking.pdf.

The October 2025 Financial Trend Analysis provides comprehensive insight into the scale and mechanisms of Iranian shadow banking networks, highlighting the continued use of shell companies, front entities, exchange houses, and international financial channels to evade sanctions, launder illicit funds, and fund military and nuclear programs, reinforcing the need for vigilance among financial institutions and regulators worldwide.

By fLEXI tEAM