After repeated sanctions, how is Iran’s largest bank still operating?

Bank Melli has spent at least the last 20 years under sanctions pressure, yet it still has open branches in places like Dubai and London. For high-risk PSPs, the point is not that the bank has escaped restrictions; it is that sanctions do not always shut down the local storefront, even when they are meant to cut off cross-border business.

1. On Monday, the Trump administration put Bank Melli back in the spotlight as part of Operation Economic Denial, with Treasury Secretary Scott Bessent promising to punish countries that do business with Iran. The stated goal was to eliminate the bank’s ability to operate abroad, and Bessent was explicit about Melli’s international footprint: “All branches of Bank Melli must remain closed and dark.”
2. Bank Melli is Iran’s largest bank and a state-owned institution. It has faced severe financial sanctions since at least 2007, when the United States formally accused it of financing Iran’s nuclear and missile programs. Countries around the world, along with the United Nations and the European Union, have also tried to stop its alleged use of foreign shell companies to fund illicit activity.
3. In practice, the bank has kept a domestic base of almost 3,100 branches inside Iran, plus a long-standing international presence in the Middle East, Europe, and Asia. That matters because the bank’s resilience is not just about size; it is also about the government backing behind it and the fact that sanctions have often restricted its corridors for movement rather than removing the institution entirely.
4. Some jurisdictions have moved harder than others. Iraq revoked Bank Melli’s operating license in 2024 under sanctions pressure. The United Kingdom and the European Union have imposed restrictions so severe that local branches, while still open, generally cannot transfer money or facilitate trade with Iran, which is central to the bank’s cross-border business.
5. US officials have long said Bank Melli has created or used international companies as fronts to send and receive funds as part of Iran’s shadow banking network, whose annual transaction volume is estimated at tens of billions of dollars. Treasury says the network exists to evade economic sanctions and finance Iran’s military activities and allied groups. In January, Treasury also accused companies in the United Arab Emirates and Singapore of acting as shell companies or working through them to route money to and from Iran.

For PSPs, acquirers, and banks that still touch high-risk corridors, the useful read here is simple: a sanctions designation does not always mean a bank disappears from view. More often, it means local branches can remain physically open while the cross-border payment function gets squeezed, licensed down, or pushed into other channels.