Iran sanctions reach education: Duolingo blocked, TOEFL and GRE in doubt

The regime needs hard currency to defend the rial, pay its military and security forces, and keep salaries, pensions, and subsidies flowing. Reports from across the country already describe wages months in arrears, delayed pension payments, and near-daily protests by workers and retirees.

It also needs imports that can physically arrive in the country. China provides neither, with its overland rail corridor being marginal next to the seaborne trade the blockade cut off.

When the Islamic Republic sells oil to China it is paid in yuan, which it already had more than it could spend before the blockade was in place.

The lifeline that China provides to the Iranian regime has proven to be not as helpful in a crisis. While China buys almost all of Iran’s oil, is the largest supplier of the consumer goods Iran imports, and supplies the components that built the regime’s weapons systems, those transactions are entirely on China’s terms.

The relationship is structured around what China wants: the Islamic Republic isn’t paid in currency it can readily deploy. Its main revenue source is largely stuck in China in yuan and can only be swapped for imports that are blocked by the blockade.

China’s private sector is so connected to the rest of the world that it is susceptible to de-risking under pressure.

While Beijing gives cheap cover by condemning American sanctions and ordering its companies to ignore them, its real support has not escalated with the conflict, with the exception of a deniable shoulder-fired missile deal that may not have made it through.

The bank in Dubai

On Friday morning, Treasury named the bank Secretary Bessent had been promising all week, and as I predicted, it was not Chinese.

The Financial Crimes Enforcement Network proposed a rule to cut the UAE branches of Banque Misr, Egypt’s second-largest bank, off from the international financial system, saying they had processed roughly 1.8 billion dollars for 103 companies tied to Iranian shadow banking networks.

The proposal is subject to a 30-day comment period and, if finalized, would cut Banque Misr’s UAE branches off from US correspondent banking.

The choice of a UAE bank reflects that the Emirates is where the regime gets what it needs most. The hard currency comes back through Dubai, where front companies and brokers deal with the world on Iran’s behalf and exchange houses convert the proceeds into currency the regime can spend at home. Dubai functions for Iran the way Hong Kong functions for China.

The same traders supply the imports Iran cannot buy directly, Western machinery, electronics, and parts, purchased in their own name and re-exported across the Gulf. The Emirates also moved Iranian fuel oil, which it sold into the regional ship-fuel market through Fujairah, one of the world’s largest bunkering hubs, where blending stripped its Iranian identity. The blockade now cuts off the Iranian supply.

Even the oil money parked in China depends on this channel. What the regime manages to repatriate from those accounts moves through the Emirates, which is why a trade halt announced in Abu Dhabi reaches revenue earned in Shandong.

The pressure is landing on a country that has already turned against the Iranian regime. The Islamic Republic has fired missiles at the Emirates, and on August 19th, Abu Dhabi announced that all trade and financial transactions with Iran were halted.

American officials had pressed Abu Dhabi for years over the exchange houses and trading companies serving Iran, but the attacks aligned incentives between the U.S. and UAE as a shared security concern. The halt has no precedent in a country that has served as Iran’s commercial gateway for decades, and its value will be decided by enforcement.

The land border

What is of importance in Turkey is the remaining cross-border trade. Petrochemicals and metals earn less than oil, but the proceeds are in currency the regime can spend. The goods are also easier to sell, since petrochemicals and metals don’t carry the same fingerprint as Iranian crude, and can disappear across the border into Turkish plants to be resold.

Washington has designated small and mid-sized Turkish buyers of these commodities for years without meaningfully slowing the trade. The larger importers that have so far gone untouched are most susceptible to the renewed pressure campaign.

The UAE’s suspension leaves Turkey as one of the few channels the Islamic Republic has left, a major hub it can reach by land. Turkish banks are unlikely to handle displaced Iran business, especially after Halkbank’s decade-long criminal case ended this year with a deal barring Iran business that touches the U.S., after its deputy general manager went to American prison. Turkey’s banks avoid the regime’s business rather than process Iran-linked payments. After United Nations sanctions snapped back, Ankara froze the assets of dozens of Iranian entities, including Bank Sepah.

If the pressure on buyers is effective, what remains of the regime’s business in Turkey is what has always run outside the system, cash collected in Turkey and carried across the border.

Iraq’s oil and dollars

The Iran-Iraq border provides an accessible path through the blockade for the Islamic Republic to get its oil out. Iranian crude and fuel oil are blended with Iraqi cargoes, onshore and in ship-to-ship transfers at sea, and sold as Iraqi product. The smuggling earns the regime and its proxies at least a billion dollars a year. The regime collects its share of earnings from the U.S. dollars in Iraq’s own banking system.

The pressure on Iraq’s dollar system is already built and can tighten. Iraq sells its oil for dollars that are held at the Federal Reserve Bank of New York, and for years its banks drew those dollars through a central bank auction that Iranian networks used to buy hard currency. The Treasury Department and the New York Fed barred roughly two dozen Iraqi banks from that window, and at the end of 2024 the auction was shut and replaced with correspondent channels open only to vetted banks. In April, Washington reportedly blocked a shipment of nearly 500 million dollars in banknotes to Baghdad. Electronic transfers continued, and physical deliveries resumed months later.

Pressure here will take the form of policing the correspondent channel, monitoring the vetted banks and cutting off any that move money for the regime, with continued outreach to Baghdad. Iran-backed militias, which hold seats in parliament and units in Iraq’s security forces, run the oil trade across the border, a problem that has confounded policymakers for years due to the Islamic Republic’s meddling in Iraq.

But if the regime cannot turn the proceeds into dollars, the fact that oil crosses the border is less important and turns into the same problem the regime has in China.

What the Islamic Republic needs from its neighbors is what China cannot give it, money it can spend and imports that can arrive. That is why the campaign started in the Emirates rather than Beijing, and why the pressure everywhere aims at the point where the regime’s earnings become usable.

Stopping the trade at the source is not required. If the proceeds cannot be converted, the oil and goods crossing Iran’s borders earn the regime what its oil sales to China earn — money it cannot readily deploy.

The Islamic Republic has made the work easier, firing missiles at its neighbors’ cities and critical infrastructure and mining and attacking the strait its neighbors’ economies depend on. The countries that carried Iran’s business for years now have their own reasons to end it.

Shipping between Dubai Creek and Iranian ports has fallen sharply. At a terminal historically used by wooden dhows trading with Iran, a security guard told the FT vessels were now heading to Oman and India. “No more Iran since last week,” he said.

The disruption matters because Dubai has for decades served as one of Iran’s most important gateways to international trade and finance. Pre-war commerce between Iran and the UAE was worth nearly $30 billion annually.

“The UAE is the only avenue for Iranian imports, as Iran has access to no other major container port other than Jebel Ali in Dubai,” Esfandyar Batmanghelidj of the Bourse & Bazaar Foundation told the FT.

The effects are increasingly visible in Dubai’s traditional trading districts. But the economic break remains far from complete.

Bank Melli and Bank Saderat, both under US sanctions, continue serving customers through more than a dozen UAE branches combined, despite US Treasury Secretary Scott Bessent calling for every Bank Melli branch worldwide to be closed. The two Iranian banks have more than 12 branches between them in the UAE, according to the report.

A Bank Melli employee said daily transactions, lending and letters of credit had seen no significant disruption and that the bank had recently renewed its license with the UAE central bank.

“We’re used to this,” the employee said, referring to previous sanctions.

Iranian airlines are also still flying to Dubai, the Iranian Business Council remains operational and Iranian produce continues to reach markets in the city.

Iranian traders are meanwhile adapting. One Tehran businessman told the FT that goods had been stockpiled in Turkey, some shipments were being rerouted through Oman and cargo could still be sent from Dubai to Bandar Abbas using false destinations on shipping documents.

“We are bypassing the blockade in the same way we have been bypassing sanctions,” he said. “Not much has changed.”

Washington increased the pressure Friday by moving to cut the UAE branches of Egypt’s Banque Misr from access to US financial institutions over alleged Iran-related activity.

The campaign comes after the UAE announced it was suspending trade and financial transactions with Iran. But analysts told the FT that centuries-old commercial ties and Dubai’s reliance on trade make a complete separation difficult.

China has warned that it would respond if Chinese companies were targeted by any significant expansion of US secondary sanctions related to Iran, prompting Iranian officials to portray Beijing as a potential obstacle to Washington’s effort to further isolate Tehran economically.

The question has become more pressing as the Trump administration weighs whether to extend its campaign to Chinese financial institutions.

Asked Thursday why Washington had not imposed new sanctions on Chinese banks dealing with Tehran, President Donald Trump suggested such measures could already be under consideration.

“You don’t know if I’m doing it. I don’t have to announce everything,” Trump said.

China’s war too?

Some in Tehran see China’s resistance as part of a much larger struggle with Washington in which Iran has become an important front.

Hasan Ameli, the Supreme Leader’s representative in Ardabil province, argued during Friday prayers that Beijing understood that the United States’ ultimate confrontation was with China rather than Iran.

“China fully understands that America’s main war, and the war of the future, is with China, and this war passes through Iran,” Ameli said. “If America gains control over Iranian oil, it will prepare for war with China.”

He described China’s position as “a major opening for Iran’s economy and a heavy blow to American sanctions,” arguing that Tehran could use it to ease Washington’s economic pressure.

Mohammad-Bagher Ghalibaf, Iran’s parliament speaker and the country’s special representative for China, also welcomed Beijing’s position.

“The Iran-China comprehensive strategic partnership is rooted in mutual respect, win-win cooperation, and a shared vision for a multipolar world. This relationship needs no one’s permission,” he wrote on X.

Alaeddin Boroujerdi, a member of parliament’s National Security and Foreign Policy Committee, pointed to China’s importance as one of Iran’s largest oil buyers and called for faster implementation of the two countries’ 25-year cooperation agreement.

“Given China’s opposition to American sanctions against Iran and its role as one of the largest buyers of Iranian oil, there is considerable potential for expanding trade and economic cooperation,” he said.

China’s interests, not Iran’s

But even among those who see China as an important counterweight to US pressure, there is skepticism over a crucial assumption: that Beijing’s interests and Tehran’s necessarily coincide.

Majid-Reza Hariri, head of the Iran-China Chamber of Commerce, said China was not confronting Washington because of any military or ideological alliance with Iran.

“Rather, its economic and strategic interests require it to preserve its trade independence,” Hariri told Khabar Online.

He acknowledged that intensified US pressure could inflict significant economic damage on Iran, but argued that Washington could not cripple the Iranian economy without broader international cooperation.

Relations with China and Iran’s neighbors, he said, remained important to the country’s economic resilience.

Iranian journalist Ata Bahrami similarly argued that Beijing’s position should be understood primarily as a defense of its own sovereignty and growing power rather than a commitment to Iran.

“Their clear message to Washington is: ‘We have grown stronger and you must respect our sovereignty,’” he said. “In fact, Iran is the starting point for demonstrating this power.”

The Hormuz contradiction

The limits of the partnership become more apparent in the Strait of Hormuz, where Iran’s own actions potentially conflict with Chinese interests.

Moderate journalist Ahmad Zeidabadi questioned whether Beijing could be expected to deepen its support for Tehran while Iran keeps closed a waterway through which China receives more than 40% of its oil.

Zeidabadi also pointed to the fact that Ghalibaf has yet to visit Beijing despite his appointment as Iran’s special representative for China, asking whether the delay could reflect Chinese frustration with Tehran’s refusal to end its threat over Hormuz.

The problem goes beyond political differences. Even if Beijing refuses to comply with US secondary sanctions and Chinese buyers remain willing to purchase Iranian oil, Tehran must still be able to move that oil out of the Persian Gulf under a US maritime blockade.

Overcoming that obstacle would potentially require a level of Chinese involvement in Iran’s confrontation with Washington that Beijing has so far shown no willingness to undertake.

The debate inside Iran therefore exposes the gap between diplomatic resistance to US sanctions and the practical ability to defeat them.

Beijing may be willing to protect Chinese commercial interests and challenge Washington’s extraterritorial sanctions, but that is different from assuming the economic—let alone military—costs of Iran’s confrontation with the United States.

For Tehran, China may be Washington’s biggest obstacle in enforcing its economic campaign, but not necessarily Iran’s economic lifeline.

The US Treasury on Friday labeled Banque Misr’s UAE branches a “financial institution of primary money laundering concern” and proposed cutting them off from the dollar system, marking the first Section 311 action against a third-country bank under Washington’s new Operation Economic Outcast.

The Treasury’s Financial Crimes Enforcement Network (FinCEN) estimates that between January 2024 and June 2026, Banque Misr UAE processed approximately $1.8 billion in transactions for 103 companies it assesses are potentially part of the Islamic Republic’s “shadow banking” network.

The department described the bank as “a critical node for the Iranian regime’s access to US dollars” and said its customers included front companies working for Iran’s Ministry of Defense and Armed Forces Logistics and the Revolutionary Guards, as well as a company described in media reports as a money-laundering conduit for Mojtaba Khamenei.

“We also warned that Iran’s enablers cannot continue to enjoy access to the US dollar and the global financial system,” Treasury Secretary Scott Bessent said. “Banque Misr UAE decided to find out the hard way.”

The move is the first use of Section 311 under Operation Economic Outcast, which Bessent announced on August 24 with the stated aim of cutting off the Iranian government’s revenue streams worldwide.

Unlike conventional sanctions, however, the FinCEN action involves no asset freezes.

Cutting off the dollar

Section 311 of the USA Patriot Act allows the Treasury to designate a foreign financial institution as being of “primary money laundering concern” and impose special measures restricting its access to the US financial system.

In Banque Misr UAE’s case, FinCEN has proposed the most severe option, known as the fifth special measure.

The measure would not only close the bank’s three direct correspondent accounts with US financial institutions. American banks would also be required to prevent Banque Misr UAE from accessing dollars indirectly through intermediary foreign banks.

The proposal is subject to a 30-day public comment period after publication in the Federal Register before it can be finalized.

The measure applies only to Banque Misr’s five UAE branches — two in Dubai and one each in Abu Dhabi, Sharjah and Ras Al Khaimah. The bank’s Cairo-based parent and operations in other countries are excluded.

Iran-linked transactions

FinCEN named three Banque Misr UAE customers as examples of the activity behind its action.

UAE-based Alpa Trading FZCO conducted more than $32 million in transactions and, according to FinCEN, procured goods on behalf of Iran’s defense ministry and the Revolutionary Guards.

Naba Alzaki Raw Materials Trading LLC processed more than $29 million and was identified as a front for the Iran-based Khandan Exchange. Midas Oil Trading DMCC conducted more than $1 million in transactions and has been described in media reports as a money-laundering conduit for Mojtaba Khamenei.

Of the $1.8 billion in potentially Iran-linked transactions identified by FinCEN, roughly $520 million was processed in the 12 months to June 2026, a period covering the war and tightening US sanctions.

FinCEN described the proportion of suspected Iranian activity relative to the size of Banque Misr UAE as “concerningly high.”

The agency has previously said it identified about $9 billion in potential Iranian shadow-banking activity moving through US correspondent accounts in 2024 alone.

The network relies on exchange houses inside Iran and front companies registered in third countries, particularly the UAE and Hong Kong, to turn revenue from sanctioned Iranian exports into usable currency.

A growing bank

Banque Misr UAE’s audited accounts show that its business was expanding during the period in which FinCEN alleges it became a conduit for Iran’s shadow-banking network.

Total assets rose 11% in 2025 to 23.4 billion dirhams ($6.4 billion), customer deposits increased 9% to 19.1 billion dirhams and loans jumped 60% to 8.8 billion dirhams.

The accounts also show the importance of trade finance to its business. Its books carry more than 1.3 billion dirhams in letters of guarantee and 3.6 billion dirhams in undrawn credit commitments.

Losing dollar correspondent access would therefore strike directly at a business heavily involved in cross-border trade finance, even without freezing any of its assets.

The bank appears well capitalized, with a capital adequacy ratio of 24.7%, well above the UAE central bank’s 10.5% minimum. The immediate threat is therefore not insolvency but the viability of parts of a business dependent on international currency settlement and trade finance.

Banque Misr is Egypt’s second-largest bank and is fully owned by the Egyptian state. That makes Washington’s decision to target its UAE operations particularly significant as the US seeks to persuade foreign financial institutions to stop facilitating Iranian trade.

The move nevertheless stops short of targeting larger financial institutions, particularly major Chinese banks involved in financing Iranian trade, a step Washington has so far avoided amid concerns over wider financial disruption and retaliation.

By threatening a state-owned bank belonging to a major Arab partner with exclusion from the dollar system, Washington is setting out the potential cost for third-country institutions that continue handling business it considers part of Iran’s shadow-banking network.

The warning is now explicit: institutions dealing with Tehran may increasingly have to weigh that business against their access to the dollar.

The Treasury’s Financial Crimes Enforcement Network proposed barring Banque Misr’s six UAE branches from correspondent banking access to US financial institutions, restricting their ability to conduct dollar transactions.

Treasury estimates the branches processed about $1.8 billion in transactions between January 2024 and June 2026 for 103 companies potentially linked to Iran’s shadow-banking networks, describing the operations as a “critical node” in Tehran’s access to US dollars.

“Treasury promised to sever every economic lifeline Tehran has left and finally end the threat of the Iranian regime,” Treasury Secretary Scott Bessent said.

“We also warned that Iran’s enablers cannot continue to enjoy access to the US dollar and the global financial system,” he added. “Banque Misr UAE decided to find out the hard way.”

Bessent had previewed a “major announcement” involving secondary sanctions against an international bank earlier this week as he launched what Washington has called an “Economic D-Day” against Iran and institutions that facilitate its trade.

The measure is narrower than Bessent’s warning initially suggested. It applies only to Banque Misr’s UAE branches, leaving its Cairo headquarters and branches in countries including France, Germany, Saudi Arabia, Lebanon and Djibouti able to continue conducting dollar transactions.

The proposed restriction is also subject to a 30-day public comment period before taking effect.

The Financial Times said the limited scope highlighted Washington’s reluctance so far to target major Chinese banks and other large financial institutions involved in financing Iranian trade, amid concerns over potential disruption to global markets and retaliation.

China remains particularly important to Tehran. Chinese purchases of Iranian oil account for about 45% of the Iranian government budget, according to the US-China Economic and Security Review Commission, cited by the FT.

The Treasury separately sanctioned Reza Mohammad Taeedi, general manager of Iran’s Bank Melli branch in Dubai, as well as a Hong Kong-based company it accused of helping launder money for a sanctioned Iranian exchange house.

Banque Misr UAE did not immediately respond to a Reuters request for comment on Friday, while Reuters said it was unable to reach Taeedi.

The measures come as Washington seeks to intensify economic pressure six months into its war with Iran while avoiding measures that could cause wider financial disruption. Iran has urged other countries not to participate in the new US sanctions campaign.