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The new geopolitical realities mean that payments firms will need to reassess their compliance priorities to protect themselves against the risks posed by Iranian and other sanctioned actors.
The conflict in the Middle East began on February 28, 2026, with the US and Israel launching strikes on Iran that led to the death of Supreme Leader Ali Khamenei and several senior officials.
Iran responded with a flurry of retaliatory strikes on targets in the region, including in Israel, Kuwait, Saudi Arabia, Bahrain and the UAE, and has closed the Strait of Hormuz to shipping.
In addition to the war’s wider geopolitical impact, it has had and will continue to have a significant effect on payments firms as they seek to operate and remain compliant.
The conflict has acted as a catalyst for a shift in the governance of cross-border value transfer, the enforcement of sanctions and the deployment of alternative financial infrastructures.
Iran as previously known is unlikely to survive unchanged, which could create a significant power vacuum and large-scale sanctions evasion.
We will likely see a predictable (if hostile) state replaced by a mix of “shadow state” actors – a decentralised network of individuals linked to the government and the Islamic Revolutionary Guard Corps (IRGC) who control the flow of both oil and digital assets.
For compliance officers, this means that the risk has evolved from identifying Iranian entities to distinguishing Iranian-funded networks.
Beyond the immediate humanitarian and political crisis, the conflict has effectively weaponised the global financial system and could be a key milestone in a decoupling of regional wealth from Western-monitored infrastructure.
Digital assets and sanctions
Digital assets have played a key role in events so far, with the Iranian regime and elites favouring digital asset rails as their primary escape valve for capital flight.
Research by crypto compliance provider Elliptic shows that crypto-asset outflows from Iranian exchange Nobitex surged within minutes of the first US-Israeli attack on Iran, with outgoing transaction volumes spiking by 700 percent.
Chainalysis research shows that by late 2025, the Islamic Revolutionary Guard Corps (IRGC) and its proxy networks already accounted for more than 50 percent of the value received by Iranian crypto services, moving more than $3bn to support regional militia networks and dual-use procurement.
The primary settlement asset for these flows is no longer Bitcoin, but dollar-pegged stablecoins such as USDT on the Tron network, which provide the liquidity and stability required for commodity trade settlement.
Digital asset providers should be aware of the threat posed by such movements – Iran has long been subject to Western sanctions, and authorities are mindful of the need to maintain vigilance.
In February 2026, before the war began, the Financial Action Task Force (FATF) issued a public statement reiterating its call for members and all other jurisdictions to apply effective countermeasures against high-risk jurisdictions, including Iran.
Specifically, FATF urged jurisdictions to limit business relationships or financial transactions with Iran on a risk basis, stating that these measures should include virtual asset transactions.
Organisations should also keep in mind that in 2024, the US doubled the statute of limitations for sanctions violations under the International Emergency Economic Powers Act and the Trading With The Enemy Act from five to 10years.
This retroactive exposure means that every transaction processed today with a potential Iranian connection carries a decade of legal liability.
In addition to the risk of sanctions violations, payments organisations should be aware of the possibility of cyber attacks on payments infrastructure.
This could include denial-of-service attacks aimed at undermining public confidence in the digital government and financial services of adversary states.
Alternative rails and ‘de-Swifting’
The 2026 war is also a milestone in the “de-Swifting” of a significant portion of the global economy. As Western sanctions have sought to increase the pressure on jurisdictions such as Russia, the expansion of BRICS to include oil-exporters like Iran and the UAE has created the foundations for a parallel financial system.
As covered by Vixio, members of BRICS are reportedly contemplating linking their central bank digital currencies (CBDCs) to facilitate cross-border payments and reduce reliance on the US dollar.
If the initiative succeeds, it could create alternative payment methods that will affect nearly half of global trade, facilitating cross-border payments that never touch a US correspondent bank.
All five core members, China, India, Russia, Brazil and South Africa, are experimenting with digital fiat currencies, although they are at different stages of development.
China's e-CNY is the most advanced, having been in pilot use for several years and is being tested for both retail and cross-border transactions, making it one of the most mature CBDC programmes globally.
Russia, meanwhile, is piloting a digital ruble and aims for broader implementation through 2026, partly driven by a strategic desire to circumvent restrictions from Western financial infrastructure.
This system could offer a lifeline for Iran, allowing it to transact with major trading partners such as India and China in local currencies without triggering the automated compliance flags that dominate the dollar-clearing system.
The transforming financial landscape
As firms adapt to the new geopolitical realities, they should prioritise several key initiatives to protect themselves against the risks posed by Iranian and other sanctioned actors.
First, organisations should move beyond siloed compliance departments towards a more connected technology architecture that integrates data across fraud, sanctions and obscured ownership typologies to detect shadow state actors operating through multiple shell layers.
By integrating data across the compliance function, firms will be better placed to identify entities using state resources and diplomatic cover to conduct seemingly routine commercial trade.
Second, firms should adopt artificial intelligence (AI) systems that can autonomously read regulatory updates and adjust and act accordingly. Doing so will help to avoid violations through slow responses.
As the speed of capital flight increases, traditional batch-screening will no longer be sufficient, meaning AI systems may be the only viable option to ensure that organisations respond in a timely manner.
Third, with the US having doubled the statute of limitations for sanctions violations, firms should consider investing in blockchain analytics and automated auditing tools that can re-screen historical transactions against newly issued designations.
Such systems must be capable of re-examining a decade of historical transactions in real time to ensure that what was once a clean payment does not become a cause for enforcement action in the future.
The impact of the war underlines the importance of compliance evolving from a back-office function into a strategic force that helps firms navigate an increasingly fragmented financial system and avoid threats.
If geopolitical tensions continue to intensify, the future may be one of bilateral agreements, the use of intermediary currencies and divergence from global standards.
In this scenario, regional systems and payment methods would dominate specific use cases, fundamentally transforming the financial landscape and making international connectivity more challenging, particularly for institutions with multi-regional operations.
