US Hits Iran's Carmakers and Railways With Sanctions, Targets Russia-Linked A7 Network
Treasury widens "Operation Economic Outcast" to sectors it says Tehran now leans on under the naval blockade
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File photo: The US Treasury Building in Washington, DC, with the Washington Monument in the background. Photo: MeanieHyaena, CC BY 4.0, via Wikimedia Commons
The United States on Thursday imposed sanctions on Iran's automotive and rail industries and moved against a Russia-linked shadow banking network, expanding a campaign aimed at choking off Tehran's revenue as the war between the two countries enters its eighth month.
The Treasury Department's Office of Foreign Assets Control (OFAC) issued two new determinations under Executive Order 13902 that allow it to sanction anyone operating in Iran's automotive or rail sectors, according to a department statement.
Among the companies designated were Iran Khodro and SAIPA, which Treasury says together account for more than 90% of Iran's domestic car market, along with subsidiaries Iran Khodro Diesel, Pars Khodro and Zamyad. The state-owned Islamic Republic of Iran Railway Company, Raja Passenger Trains Company and the private Railway Transportation Company were also listed.
Blockade pushes trade onto rail and road
Treasury argued that Iran has come to depend on rail and road transport to move oil and sustain regional trade because of the US naval blockade. Reuters, in a report carried by Arab News, said the measures target those alternative routes for petroleum, fertilizer and chemicals.
The action also reached foreign suppliers that Treasury accuses of shipping auto parts to Iran, including firms in the United Arab Emirates, Hong Kong, Turkey and Indonesia, as well as metals-sector companies such as the China-based subsidiary of machinery maker HEPCO.
"The Iranian regime's ability to fund its war machine and inflict terror on the world has been severely diminished thanks to Operation Economic Outcast," Treasury Secretary Scott Bessent said. "Today's action directly targets Iran's enablers and lays the groundwork for the United States and our partners to drain the regime's revenue once and for all."
A7 labelled a criminal organisation
In a separate step, OFAC designated the A7 Network as a significant transnational criminal organisation. Treasury describes A7 as a Russia-linked shadow banking system that disguises sanctioned payments as ordinary trade, and alleges it has been used by Iran's Islamic Revolutionary Guard Corps.
The department's financial crimes unit, FinCEN, said A7's intermediary companies processed more than $17 billion between January 2025 and June 2026, and proposed a rule that would bar fund transfers involving them.
Bessent said the move "sends a clear message that if you facilitate illicit finance for America's adversaries, you will lose access to the U.S. financial system."
CNBC noted that it was not immediately clear how much additional impact the penalties would have on an Iranian economy that has lived under heavy sanctions for years. The campaign, launched on Aug. 24, has also raised questions about whether Washington will extend its reach to China, Iran's biggest trading partner, the network reported.
