The U.S. Is Trying to Shut Down Iran's Biggest Bank Around the World — Here's What's Going On

On August 25, 2026, Treasury Secretary Scott Bessent announced what he called an "economic onslaught" against Iran's financial ties worldwide. He demanded that foreign branches of Iran's largest bank, Bank Melli, be shut down and introduced new sanctions aimed at cutting off the Iranian economy from the rest of the world. The announcement came in remarks on August 24 as part of an ongoing Treasury effort called "Operation Economic Outcast." (Treasury, Politico, New York Times)

Sanctions are penalties that governments use to punish or pressure other countries, usually by freezing their money or blocking them from doing business internationally. Operation Economic Outcast is a sanctions program the Treasury launched in July 2026. It previously targeted a key financial backer of Iran's Supreme Leader along with other parts of Iran's banking system. The new announcement focuses squarely on Bank Melli, Iran's largest state-owned bank, and pressures foreign governments to close its operations in their countries. (Treasury)

What makes this different from routine sanctions is that the U.S. is publicly asking other countries to take action against Bank Melli within their own borders. The Treasury cannot force a foreign government to close a bank operating in its territory. It can only ask, pressure, or threaten penalties against companies that do business with the sanctioned bank. The European Union has done something like this before: in 2008, the EU froze Bank Melli's assets, a step then-Under Secretary David H. McCormick publicly noted. (Treasury)

This is not the first time the U.S. has gone after Bank Melli. The Treasury first sanctioned the bank in 2018, saying it had been used to move money to the IRGC-Qods Force, which is the overseas branch of Iran's Revolutionary Guards. On the same day, November 5, 2018, the Treasury also sanctioned Mir Business Bank as part of the same action. The 2026 campaign picks up where these earlier efforts left off, rather than starting from nothing. (Treasury)

Operation Economic Outcast has also targeted the financial networks surrounding Iran's Supreme Leader. In November 2020, the Treasury went after a large network tied to Bonyad Mostazafan, a foundation the Treasury said had built its wealth partly through seized assets and deals with human rights abusers. The current push ties those earlier actions to the demand to close Bank Melli globally. (Treasury)

The economic pressure is paired with a signal about military force. Bessent told CNBC on August 20 that the United States likely will not restart large-scale combat against Iran as it increases economic pressure. That statement frames the sanctions push as the main tool the U.S. plans to use, rather than military action. (CNBC)

The broader context here is a deliberate choice about how to pressure Iran. By saying military action is less likely while announcing an "economic onslaught" at the same time, the Treasury is trying to funnel all its pressure through the financial system. Whether that works depends on whether countries where Bank Melli still operates go along with U.S. demands. The EU's 2008 asset freeze against the bank, while significant, did not produce the worldwide shutdown Bessent is now calling for. The gap between what happened before and what the U.S. wants now is the thing to watch.

For banks and financial companies that have any connection to Bank Melli, Bonyad Mostazafan, or the Supreme Leader's financial networks, the risks are immediate and higher. The combination of new sanctions, public demands for branch closures, and a reduced threat of military action suggests that financial pressure is the main way the U.S. plans to deal with Iran for the foreseeable future.