Treasury Secretary Bessent Warns Chinese Banks Face Secondary Sanctions if Iranian Money Flows Proven Through Their Accounts

Treasury Secretary Scott Bessent publicly warned that the United States sent letters to two Chinese banks informing them that if Iranian money flows could be proven to be transiting their accounts, the U.S. is prepared to impose secondary sanctions — a significant escalation of financial pressure on Beijing designed to cut off Iranian access to the international banking system through Chinese intermediaries.

"Two Chinese banks received letters from the U.S. Treasury," Bessent stated. "If we can prove that there is Iranian money flowing through your accounts then we are willing to put on secondary sanctions." Secondary sanctions are extraterritorial financial penalties that punish foreign institutions — in this case Chinese banks — for conducting business with a sanctioned party (Iran), even when those transactions do not touch the U.S. financial system directly. The threat of secondary sanctions against Chinese banks is particularly powerful because Chinese banks rely on U.S. dollar correspondent banking relationships and access to SWIFT — both of which can be severed through Treasury Department action.

The warning comes in the context of China's documented role in sustaining Iranian economic activity during the conflict. Chinese vessels have been among the few to transit the Strait of Hormuz under toll arrangements with Tehran, paying fees in Chinese yuan. China imports approximately 90 percent of its energy through the strait and had been Iran's largest oil customer before and during the war. The Trump administration has separately threatened Beijing over reports that China is preparing to supply Iran with man-portable air defense systems (MANPADS) through third-party intermediaries.

The secondary sanctions threat escalates the financial dimension of the conflict into direct confrontation with the Chinese banking system. Chinese state banks — including ICBC, Bank of China, China Construction Bank, and Agricultural Bank of China — are among the largest financial institutions in the world and maintain extensive dollar-denominated correspondent relationships. A credible secondary sanctions action against even one major Chinese bank would send immediate shock waves through global financial markets and could trigger a sharp deterioration in U.S.-China relations at a moment when Trump is scheduled to visit China next month.