The U.S. Treasury Department has recently sanctioned several entities in the UAE, accusing them of assisting Iran in transferring sanctioned funds and maintaining a shadow banking network through Dubai trading companies, exchange houses, and cryptocurrency channels.

The Treasury stated that Iran's Shahr Bank used Dubai-registered HMS Trading FZE and two exchange institutions, Titan Exchange and Alps International, to handle hundreds of millions of dollars related to Iran's oil exports.

OFAC sanctioned Shelbit General Trading and Shelbit Exchange, based in the UAE, claiming they provide a cryptocurrency settlement channel for the Iranian regime. A Reuters investigation indicated that this platform is at the core of a network facilitating around $4 billion in sanctions evasion funds, involving the Central Bank of Iran, entities linked to the Iranian Revolutionary Guard, and illegal financial activities.

Funds are typically operated through Iranian oil, petrochemicals, metals, and re-export trade to form overseas receivables, which are then layered through Dubai free zone companies, exchanges, shell companies, agency accounts, and digital assets like USDT for transfer, ultimately exchanged for foreign currency usable for imports, asset allocation, or cross-border payments.

Dubai's ports, free zones, gold and commodity trading, exchange networks, offshore company structures, and logistics systems connecting the Middle East, South Asia, and East Africa make it a major external hub for Iranian commercial activities, while also being used by some sanctioned networks to conceal actual beneficiaries, sources of funds, and the flow of goods.

In market mechanisms, buyers are Iranian-related enterprises needing foreign currency, import payments, and cross-border fund transfers, while sellers are the Dubai network providing trade mediation, exchange, logistics, company registration, on-chain transfers, and settlement services. U.S. sanctions and UAE compliance reviews will force funds to shift towards more intermediaries, third-country entities, cash, or on-chain stablecoins, increasing settlement costs and risks of fund freezes; sanction screening, on-chain risk control, compliance custody, and auditable trade financing service providers will benefit, while platforms and exchange networks associated with high-risk addresses or counterparties will be under pressure.

Source: Public Information