S&C Partner Zachary Goldman shared insights with the National Law Journal about the application of Patriot Act Section 311 and its implications for financial institutions following the U.S. Treasury Department’s proposed rule against Banque Misr UAE. The action, which is part of Treasury’s “Operation Economic Outcast,” would cut off the Egyptian bank’s UAE arm from the U.S. financial system after allegations it aided Iranian companies in evading U.S. sanctions.
Zachary noted that, while few U.S. financial institutions deal directly with Iranians, firms need to scrutinize whether the banks and counterparties they serve have Iranian ties. “What are the kinds of institutions and the kinds of activity that may pose hidden or not so obvious risks of Iranian connectivity?” he said.
He described Section 311, which prohibits U.S. financial institutions from dealing with entities designated as “primary money laundering concerns,” as an effective tool for Treasury’s Iran strategy. “It’s designed to address the specific thing that Iran is trying to do, which is to use banks that have either extremely lax controls or are actively participating in misconduct in order to access the international financial system.”
Zachary also highlighted Section 311’s reach: “You can potentially get at those nested relationships that as a legal matter wouldn’t really necessarily be impacted by an OFAC (Office of Foreign Assets Control) designation.”
Read the full National Law Journal article: “Banque Misr Penalties a 'Wake-Up Call' for Banks Over Hidden Iran Ties, Lawyers Say”