What did Treasury sanction on October 15, 2026, what does it say Iraq’s International Development Bank did for Iran, and what do the bank’s own records show?
In May 2025, Baghdad’s International Development Bank for Investment and Finance (IDB) was the “diamond sponsor” of a conference on combating money laundering and terrorist financing, held with the Central Bank of Iraq. On October 15, 2026, the Treasury Department sanctioned the bank, saying Iranian companies set it up to supply Iran with dollars, that it absorbed the capital of a sanctioned Iranian bank, and that it sends Iran its profits in U.S. dollars every month. The same action hit two Iranian offshore banks, four Iranian currency exchange houses, a Hong Kong front company, and a Dubai-based oil middleman. The bank, whose website says one Iraqi family owns around 68 percent of it, says Treasury’s information is wrong.
Editor’s note: On October 15, 2026, OFAC added twenty-six people and companies to its Specially Designated Nationals and Blocked Persons List under Executive Order 13902, citing Iran’s financial and petroleum sectors, and issued General License FF, which allows dealings “ordinarily incident and necessary to the wind down of any transaction involving International Development Bank for Investment and Finance” through 12:01 a.m. EDT on October 30, 2026. The same day, the State Department designated a Cuban state bank in a related action.
A Bank That Sent Iran Dollars Every Month
Treasury’s October 15 release puts the bank at the center of the action. “Iraq-based International Development Bank for Investment and Finance (IDB) provides financial facilitation services and U.S. dollar access for Iran.” It says the bank “has abused its access to the now-dissolved U.S. dollar wire auction and maintains ties to Iranian government entities and Iran-aligned militia groups (IAMGs) in Iraq.” The dollar auction was the Central Bank of Iraq’s daily sale of dollars to local banks.
The release traces the bank’s money to Tehran. “IDB was initially established by Iranian companies to support the Iranian economy and supply Iran with U.S. dollars.” Bank Melli, a state-owned Iranian bank already under U.S. sanctions, “which was located next to IDB in Iraq, closed due to U.S. sanctions and transferred its capital to IDB.” Then the payback: “IDB uses Iranian capital to conduct business, then collects any profit made and sends it back to Iran in the form of U.S. dollars each month.”
Treasury says the ownership traces to the Qods Force. “The bank’s current leadership received ownership of IDB from a dual-Iranian Iraqi financier working for the U.S.-designated Iranian Islamic Revolutionary Guard Corps–Qods Force (IRGC-QF).” “The financier continues to use his familial relationships to exert influence over the bank.” Treasury did not name him, and no other entry in the October 15 action or on OFAC’s sanctions list identifies him. The legal basis is narrower than the allegations: “IDB is being designated pursuant to E.O. 13902 for operating in the financial sector of the Iranian economy.” Executive Order 13902, signed in January 2020, covers sectors of Iran’s economy named in the order or later identified by the Treasury secretary. OFAC’s entry lists the bank’s SWIFT code, beginning IDBQ, its website, idb.iq, and an establishment date of January 11, 2011, on Arasat Avenue in Baghdad’s Karrada district.
A Diamond Sponsor of an Anti-Money-Laundering Conference
Sixteen months earlier, the bank was promoting its role in a conference on the same subject. In a May 28, 2025, item on its website, IDB “announced its participation as the diamond sponsor of the Second Anti-Money Laundering and Counter-Terrorism Financing Conference,” held at Baghdad’s Al-Rasheed Hotel on May 28 and 29, 2025, under the patronage of Iraq’s prime minister. “The conference was organized by the Union of Arab Banks, in cooperation with the Central Bank of Iraq and the Association of Iraqi Private Banks,” it said. The bank described the sponsorship “As part of its strategy grounded in compliance and transparency.” The item names no speakers and quotes no bank official. IDB’s chairman, according to the bank’s board page, “serves as the Vice President of Union of Arab Banks.”
The bank’s governance page says “IDB remains committed to best governance, risk management and compliance practices internally.” Its “Compliance Policy and Statement” page showed only its title when OctoProbe loaded it on October 22, 2026. In the bank’s 2024 annual report, its outside auditors wrote that “اتخذ المصرف الإجراءات المناسبة لمنع غسل الأموال وتمويل الإرهاب” (“the bank took appropriate measures to prevent money laundering and terrorist financing”) (Translation.) during the year and that customer know-your-customer records had been updated (p. 48).
The Family That Owns the Bank
The bank’s profile page says “Initially, IDB’s shareholders were primarily members of the Khalaf Abed Kareem family, together with a number of Iraqi investors.” It says the family “remains the biggest shareholder (around 68% of total equity).” Its shareholder page names the chairman, Ziad Khalaf Abed Karim, with 32.78 percent; Zainab Khalaf Abed Kareem, 8.66 percent; Hasan Khalaf Abed Kareem, 8.77 percent; Hanaa Mohammad Ismael, 9.23 percent; Hameed Kadhem Alwan, 8.06 percent; and Al-Abraj Holding, 8.31 percent. The Iraq Securities Commission lists the bank under the ticker BIDB, with a listing date of May 2, 2017, 400 billion dinars in capital, and Ziyad Khalaf Abdul Karim as chairman; a 2022 International Finance Corporation disclosure put his stake at 20 percent.
The chairman’s holdings extend beyond the bank. IDB’s board page says “Dr. Zead Khalaf founded ZK Holding Group, successfully transforming a family-owned business into a global success story, which is headquartered in Abu Dhabi.” ZK Holding says the family’s companies date to the 1960s and span banking, insurance, energy, real estate, and tourism. The bank lists its current board as Dr. Zead Khalaf, chairman, and Saed T. Zuraikat, Saad Faeq Abdulaziz, Engineer Manar Al-Obaidi, and Claude Khayat.
Treasury did not name the financier it says handed the bank to its current leadership. IDB’s website says the Khalaf Abed Kareem family has been its biggest shareholder since its founding. None of the shareholders or board members the bank lists, including Ziad Khalaf Abed Karim, is on OFAC’s Specially Designated Nationals list as of its October 21, 2026, update; the bank itself is.
What the Bank’s Own Filings Show
The bank’s sitemap, the file that indexes a website for search engines, lists 512 pages on www.idb.iq in English, Arabic, and Kurdish, each marked as last modified October 17, 2026, two days after the designation. It includes the shareholder, board, compliance, and financial-statement pages cited here, and the conference item in all three languages. The annual reports themselves sit on a separate host, api.idb.iq, which the sitemap does not list.
In its 2024 annual report, IDB reported total assets of 2.966 trillion Iraqi dinars, deposits of 1.910 trillion, and net profit after tax of 69.8 billion dinars (p. 5), and said it raised its paid-in capital to 400 billion dinars (p. 9). Its auditors, Dr. Ahmed Jasim Hammoudi al-Obaidi of Salah al-Baghdadi and Partners and Dr. Hasanain Hameed Majeed al-Obaidi, reported that the bank bought $700.8 million at the central bank’s currency auction window in 2024 for transfers and letters of credit (p. 46), down from $877.1 million in 2023 (2023 report, p. 38) and $1.71 billion in 2022 (2022 report, p. 40).
The same auditors’ report records the central bank’s actions on IDB. It cites central bank letters on “بالتدقيق الاستثنائي لعمليات بيع وشراء العملة الأجنبية” (“the exceptional audit of foreign currency buying and selling operations”) (Translation.) carried out through the bank from January 2 to August 31, 2024, and recommends due diligence on all transactions with correspondent banks (p. 46). It says the central bank fined IDB for exceeding its 20 percent ceiling on foreign-currency positions, later reduced the fines, and had not ruled on the bank’s request to cancel them (pp. 43, 49). It also flags “قرض مستحق على احد المساهمين” (“a loan owed by one of the shareholders”) (Translation.) of $3,761,667, due since April 30, 2018, and 15.56 billion dinars in credit to related parties (pp. 42, 44). The auditors signed off that the statements “تعبر بصورة واضحة وعادلة عن المركز المالي للمصرف” (“clearly and fairly express the bank’s financial position”) (Translation.), subject to their observations (p. 49). The report does not mention Iran or U.S. sanctions.
Offshore Banks on Kish and Chabahar
Two of the new targets are Iranian banks licensed to work in foreign currency from free-trade zones. Treasury says these banks “have been approved by the Central Bank of Iran and the Supreme National Security Council to conduct their operations using foreign currency to aid sanctions evasion schemes.” Jazireh International Bank Company, on Kish Island, “is an Iranian offshore bank affiliated with Bank Mellat”; Chabahar International Bank Overseas Company is affiliated with Bank Shahr. OFAC’s entries show both were founded in January 2022.
The Money Changers and the Rahbar Network
A rahbar is a private company that runs a sanctioned Iranian bank’s overseas payments through a web of foreign shell companies. Treasury explained the system in April: “Iranian banks cut off from the international financial system rely on private companies known as “rahbars,” which manage thousands of overseas shell companies used to execute payments for Iranian imports and exports.”
Bank Shahr’s rahbar is Farab Soroush Afagh Qeshm Company (FSAQ). OFAC sanctioned it on April 28, 2026. On October 15, Treasury went after the people who run its trades, designating seven FSAQ foreign-exchange employees: Zhila Mohammadi, Milad Katebi, Amir Sabeti, Nazanin Borji, Fatemeh Vasighi Meraji, Azadeh Abdolalipur, and Farzad Allahyar. It also named Elitesphere Trading Co., Limited, a Hong Kong company OFAC says was set up in August 2024, which Treasury says FSAQ used “to move funds through the rahbar network of brokers and front companies in support of Iranian sanctions evasion.”
Four exchange houses were designated with their owners. Treasury says Soheil and Sorush Najafzadeh and Partners Company, owned by Sorush Najafzadeh, Soheil Najafzadeh, and Mansureh Mirmohammadi, “has processed transactions worth hundreds of millions of dollars’ worth of financial transactions for Iranian financial institutions,” including entities tied to Bank Mellat and its rahbar, Tejarat Sarir Afrooz Kish, itself sanctioned in April. Abolhasan Jalali and Partners Exchange Company, run by Abolhasan Jalali and Ensiyeh Mullah Mohammadi, “has likewise facilitated tens of millions of dollars’ worth of payments for Iran’s shadow banking networks and sanctioned rahbar entities.”
Old Names in a New Action
Much of the October 15 network sits next to targets OFAC hit earlier. The oldest tie runs through Sadegh Bavi, whom Treasury calls “an IRGC-Qods Force facilitator and money launderer who also assists in weapons purchases for Iran.” He owns Bavi General Trading Company LLC, which OFAC sanctioned on March 9, 2023. At the time Treasury said that “Bavi General has helped coordinate tens of millions of dollars’ worth of payments for front companies operated by PGPICC and Triliance.” PGPICC is the Persian Gulf Petrochemical Industry Commercial Company, an Iranian petrochemical sales firm.
Bavi stayed in business. OFAC’s entry for his second firm, Bavi and Partners Exchange Company, gives an establishment date of November 18, 2024, twenty months after the first sanctions. Treasury says the Qeshm exchange house Seyyed Abbas Hosseini Parsa and Partners, run by Seyyed Abbas Hosseini Parsa and Khaled Mohiesnejad, “has a close relationship with Bavi General Trading, which has used Hosseini Parsa Exchange’s official documents and letterhead to carry out its own business operations.”
The Oil Trustee in Dubai
Treasury describes Sayyed Ruhollah Razavi as the “son-in-law of Iran’s hardline Paydari Front leader and one of the top oil trustees on whom the Iranian regime relies to sell oil and repatriate the revenue.” An oil trustee is a middleman the Iranian state hands crude to sell abroad, trusting him to bring the money home. Treasury says that before the U.S. blockade, Razavi shipped “millions of barrels of oil overseas each month on behalf of the National Iranian Oil Company,” and that the networks he used “move funds through Hong Kong to the UAE and Türkiye where they are converted to gold and cash and then smuggled on Mahan Air flights to Iran and its terrorist proxies around the world.” It says he “has worked hand-in-hand with Seyed Naiemaei Badroddin Moosavi,” a Hizballah financier designated April 15, 2026. His two Iranian companies, Farzanegan Energy Pars Company, which is building a gas condensate refinery in Bushehr Province, and Tejarat Gostar Atlas Parsian Kish Company, were designated with him.
He was not a secret. On August 15, 2026, the London-based broadcaster Iran International reported that he was a trusted intermediary in an oil-sales network it said had failed to return about $11 billion to the state. “The sources allege that Razavi has retained more than $1 billion in oil-sale proceeds and provided information about rival trustees in an effort to push them out of the market.” In September, it reported that an Iranian investigative journalist, Yashar Soltani, “named Ruhollah Razavi, son-in-law of Majid Motaghifar, spokesman for the hardline Paydari Party, as one of four who control much of the trade.” Treasury acted a month later.
Two Caribbean Passports
Two of the designated financiers carry papers from Dominica, an island nation in the eastern Caribbean. Razavi’s OFAC entry lists his citizenship as “Dominica; Turkey,” with Iranian nationality. Bavi’s lists his nationality as Iran and Dominica and gives a Dominican passport that runs to 2032; Treasury’s release calls him a “Dominican/Iranian national.” Dominica sells citizenship to foreign investors through a government program. Neither Treasury nor any other source found says how the two obtained theirs.
The Bank Says It Did Nothing Wrong
The bank rejected the allegations the next day. In a statement reported by Rudaw on October 16, it said the information behind the U.S. decision was “غير صحيحة” (“incorrect”) (Translation.) and that it could “تصحيح هذا المفهوم عبر تقديم كافة الوثائق والحقائق اللازمة” (“correct this perception by presenting all the necessary documents and facts”) (Translation.). It said it works under the supervision of the Central Bank of Iraq and that its finances are sound. Treasury has not published transaction records.
Where This Fits in Operation Economic Outcast
Treasury Secretary Scott Bessent announced Operation Economic Outcast on August 24, 2026, calling it Economic D-Day. The October 15 action targeted money; the next tranche, on October 21, went after the lawyers and agents who keep Iran’s tankers registered. OctoProbe covered that action in reports on the Panama law firm Karnakis and Karnakis and the Dubai ship agent Whales Shipping Line.
Frequently Asked Questions
What is the International Development Bank for Investment and Finance?
A Baghdad bank, established in 2011, that Treasury sanctioned on October 15, 2026. Treasury says Iranian companies set it up to supply Iran with U.S. dollars and that it sends profit made with Iranian capital back to Iran in dollars each month. In May 2025 it was the diamond sponsor of an anti-money-laundering conference in Baghdad. The bank denies the allegations.
Who owns the bank?
The bank says the Khalaf Abed Kareem family holds around 68 percent and that the chairman, Ziad Khalaf Abed Karim, holds 32.78 percent. Treasury says the current leadership received ownership from an unnamed financier working for the IRGC-Qods Force. No shareholder or board member the bank lists is on OFAC’s SDN list.
Can companies still deal with the bank?
Only to wind down existing business. OFAC’s General License FF authorizes transactions ordinarily incident and necessary to that wind-down through 12:01 a.m. EDT on October 30, 2026.
What is a rahbar?
A private company that handles a sanctioned Iranian bank’s foreign payments through overseas shell companies. Treasury says Bank Shahr’s rahbar, Farab Soroush Afagh Qeshm Company, used a Hong Kong firm, Elitesphere Trading, among others.
Who is Sayyed Ruhollah Razavi?
A Dubai-based oil middleman Treasury calls one of Iran’s top oil trustees and the son-in-law of the Paydari Front’s leader. OFAC lists him as a citizen of Dominica and Turkey. Iran International named him in August 2026.
Were any of the targets sanctioned before?
Their associates were. Sadegh Bavi’s company Bavi General Trading was sanctioned on March 9, 2023, and the FSAQ rahbar company whose employees were designated was sanctioned on April 28, 2026.
