OFAC Sanctions Russian Bank Over Iran Sanctions Evasion

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated Russian financial institution VTB Bank Public Joint Stock Company (VTB Bank) under Executive Order 13902 for its involvement in Iran sanctions evasion.

The September 14 action is part of Operation Economic Outcast, a Treasury initiative targeting financial networks that support Iran’s illicit revenue, sanctions evasion, and procurement activities. Treasury said the operation is increasing secondary sanctions risks for foreign financial institutions that continue doing business with sanctioned Iranian entities.

VTB Bank Expanded Correspondent Banking With Iran

According to the Treasury, VTB Bank established correspondent banking relationships with sanctioned Iranian financial institutions over the past three years and began expanding its presence in Tehran in January 2025.

The bank also moved billions of dollars in frozen Iranian assets and established a settlement structure using Iranian rials and Russian rubles through correspondent accounts to facilitate bilateral trade.

The designation highlights how correspondent banking relationships can create significant sanctions exposure when financial institutions maintain links to sanctioned counterparties or support transactions involving restricted jurisdictions.

OFAC had already designated VTB Bank under Russia-related sanctions authorities in 2022 and 2025. Its latest designation brings its Iranian financial-sector activities within the scope of E.O. 13902.

Secondary Sanctions Increase Pressure on Foreign Banks

OFAC warned that foreign financial institutions engaging in certain significant transactions involving designated persons may face secondary sanctions. The agency can also restrict or impose conditions on correspondent or payable-through accounts maintained in the United States.

For financial institutions, the action reinforces the need to assess not only direct customers and counterparties but also correspondent relationships, payment chains, ownership structures, and indirect exposure to sanctioned entities.

Key takeaways for compliance professionals:

• Review correspondent relationships: Reassess relationships involving Iranian financial institutions and other high-risk jurisdictions.
• Map indirect exposure: Identify ownership, control, payment-chain and intermediary links that could create sanctions exposure.
• Monitor secondary sanctions risk: Non-U.S. institutions should assess whether transactions involving designated persons could affect their access to the U.S. financial system.

The VTB Bank designation demonstrates OFAC’s continued focus on financial institutions that provide infrastructure for sanctions evasion. For global banks, correspondent banking due diligence and network-level sanctions screening remain critical to identifying indirect exposure before processing transactions.