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ANALYSIS

What’s behind US move to sanction Iran’s fintech sector

Umud Shokri
Umud Shokri

Senior visiting fellow, George Mason University

Aug 15, 2025, 16:27 GMT+1Updated: 03:16 GMT+0
FANAP develops financial and banking technologies in Iran and has expanded into surveillance systems.
FANAP develops financial and banking technologies in Iran and has expanded into surveillance systems.

The latest round of US sanctions imposed on Iran mark a shift in Washington’s strategy, moving beyond conventional financial limits to target the intertwined financial and digital networks that sustain Tehran’s economy and political control.

US officials say software, fintech, and digital payment systems are now as important as oil profits in helping Iran evade sanctions and quell dissent.

The measures introduced earlier this month also seek to counter Tehran’s growing ties with China and Russia by disrupting both illicit revenue generation and technological control systems.

What’s new about the sanctions?

The latest sanctions move beyond traditional banks to strike at the broader financial-technology system that supports sanctions evasion and internal repression.

Digital infrastructure—including alternative payment platforms, shadow banking channels, and local fintech firms embedded with surveillance tools—is becoming a core part of Iran’s resilience.

Targeting these elements signals a systemic effort to weaken Tehran’s ability to operate at home and abroad.

Who and what is targeted?

Entities named by Washington include:

  • RUNC Exchange System Company, which US officials say runs an alternative interbank messaging network enabling transactions with sanctioned partners such as China’s Bank of Kunlun, bypassing SWIFT.
  • Cyrus Offshore Bank, based in the Kish Free Zone and allegedly linked to Parsian Bank, which the US claims hides transactions and channels oil revenue to the Islamic Revolutionary Guard Corps (IRGC).
  • FANAP, a Pasargad Bank affiliate, which develops fintech platforms for Iran’s National Information Network — a domestic internet infrastructure used for censorship and surveillance, replacing foreign apps favored by protesters.

These firms illustrate how sanctions now target two pillars of Iranian resilience: authoritarian digital control systems and clandestine economic networks.

What are the implications?

Economically, the sanctions cut off access to offshore intermediaries in hubs such as Hong Kong and the UAE, complicating trade-related transfers and oil-export revenue flows.

The disruption of fintech and alternative payment systems forces Tehran to continually adjust its financial workarounds.

Geopolitically, the measures deepen Iran’s reliance on China and Russia, whose “no limits” partnership offers diplomatic cover, technology, and economic channels through multilateral bodies like the UN Security Council, Shanghai Cooperation Organization, and BRICS.

US officials say these same networks help fund Iran’s nuclear and missile programs and regional proxies.

What are the risks?

Tighter integration with Chinese and Russian systems could shield Tehran from Western pressure, eroding US influence and complicating diplomacy.

This diversification may also encourage regional instability.

Why This Matters

The 2025 sanctions highlight Washington’s recognition that the digital-financial nexus is as central to Iran’s power as its oil revenues.

By striking both, the US aims to weaken Tehran’s repressive capacity and illicit funding streams—but the strategy also accelerates geopolitical realignments that may, over time, blunt Western leverage in the Middle East.

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