Turkey cancels Istanbul licence for Iran's Bank Mellat amid sanctions scrutiny

Turkey's Banking Regulation and Supervision Agency (BRSA) announced on Monday that it has revoked the operating licence of Iran’s Bank Mellat for its Istanbul branch, effectively shutting down the bank’s activities in the city. The decision, reported by Al Jazeera, follows a series of compliance checks that concluded the bank failed to meet Turkey’s anti‑money‑laundering and sanctions‑avoidance standards.

Al Jazeera noted that Bank Mellat has been under Western sanctions for years because of alleged connections to Iran’s nuclear programme. The sanctions, imposed by the United States and the European Union, restrict the bank’s ability to transact in dollars and euros and limit its access to the global financial system. Turkey, a NATO member and a key conduit for trade between Europe and the Middle East, has faced pressure to enforce those measures more rigorously.

The revocation comes at a time when Ankara is seeking to balance its economic ties with Tehran against its commitments to Western allies. Turkey’s economy, still recovering from a series of currency devaluations and high inflation, relies on Iranian oil and gas imports, but the government has also pledged to tighten oversight of entities that could be used to evade sanctions. The BRSA’s move signals a tightening of regulatory scrutiny, especially for foreign banks operating in Turkey that are linked to sanctioned jurisdictions.

Industry observers say the decision could have ripple effects for other Iranian financial institutions with a presence in Turkey. Several banks, including Bank Saderat and Bank Keshavarzi, maintain representative offices in Istanbul, and they may now face heightened inspections or similar actions if compliance gaps are identified. The Turkish banking sector, which has been expanding its foreign‑currency services, must now navigate a more complex risk landscape.

Historically, Iran‑Turkey banking relations have been shaped by geopolitical shifts. After the 2015 nuclear deal, Iranian banks briefly regained access to European markets, prompting Turkish banks to open correspondent accounts. However, the U.S. withdrawal from the deal in 2018 and the re‑imposition of sanctions reversed much of that progress. Turkey’s latest step underscores the enduring impact of those sanctions on cross‑border finance and highlights the delicate diplomatic dance Ankara performs between Tehran and its Western partners.

The BRSA said it will monitor the situation closely and ensure that any remaining Iranian financial activities comply with Turkish law and international obligations. Bank Mellat has not yet issued a public statement, but analysts expect the bank to explore legal avenues to contest the licence withdrawal, while also reassessing its regional strategy.