U.S. Redirects Tehran Regime’s Illicit Wealth to Its Victims

Tehran is getting evicted. For decades, the clerical regime has owned prime real estate in Midtown Manhattan. On March 23, the Southern District of New York announced the entry of the United States into a settlement over Iran’s ownership of the $500-million tower at 650 Fifth Avenue with victims of Iran-sponsored terrorism and the building’s owner. Following the settlement, the building will pass to new ownership. Targets of Iranian terrorism — ranging from 9/11 victims to survivors of the 1984 bombings of U.S. military facilities in Lebanon — will also receive roughly $318 million in compensation.

This settlement completes a 17-year effort to seize the building, which has generated tens of millions in revenue for the regime in Iran. The 2017 jury verdict against the building’s owners was the largest forfeiture of its kind in U.S. history. A first payment of $129 million has already been set aside for distribution to the victims, with subsequent payments and interest to be paid across three years.

Iran Masked Ownership of the Building Using Shell Companies

The Iran-linked building at 650 Fifth Avenue was initially constructed by a foundation headed by the late Shah. Following the Islamic Revolution in 1979, the new regime gained control. Over the next decade, Iranian authorities worked to hide connections to the building through a network of layered company ownerships. Top Iranian officials controlled 650 Fifth Avenue through a state-run bank, Bank Melli, which in turn oversaw the building through Isle-of-Man-and U.S.-established Assa companies and the U.S.-established Alavi Foundation.

U.S. victims of terror hold the right to sue foreign governments responsible for terrorism, as happened in this case. However, complicated ownership networks blocked efforts to redirect value from the building to victims of terror for years, as courts disputed whether the companies linked to Iranian ownership qualified as legal targets.

Iranian Actors Have an Extensive Web of Hidden Assets

650 Fifth Avenue is not the only asset held by members of the Islamic Republic abroad. Iran’s elite store substantial amounts of wealth outside of the country through secret networks of banks and assets. In London, Supreme Leader Mojtaba Khamenei reportedly oversees £150 million in real estate. In Frankfurt, his alleged holdings include five-star hotels. In Spain, he reportedly controls luxury properties as well. Khamenei’s network alone may have moved billions of dollars into the West. Between 2018 and 2024, Iran’s Central Bank reported about $80 billion in capital flight, much of it going into foreign assets and Western banks.

Iran relies on Western-linked banking infrastructure to process transactions — which support the illicit sale of its oil, funding of terrorists, and more. Third parties, front companies, and layers of businesses coordinate to conceal Iranian connections to financial flows, enabling Iranian actors to bypass sanctions. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network noted that U.S. correspondent banks observed $9 billion in possible illicit Iranian transactions in 2024 alone.

Failure To Target Financial Networks Empowers the Regime

Current U.S. policy allows businesses to hide malign actors and activity behind legal complexity. Iran depends on this system to obscure its activity. Even mechanisms designed to target hidden activity contain loopholes that hostile actors can exploit. Foreign-controlled shell companies, for example, can simply register in America to evade review by the Committee on Foreign Investment in the United States and to bypass requirements to disclose their beneficial owners — the individuals who effectively run a corporate structure.

Meanwhile, investments with known links to sanctioned actors can continue if their sanctioned owners control less than 50 percent of the managing company. Increasing foreign transaction screening requirements, mandating beneficial ownership reporting, and raising penalties for accountants, lawyers, and banks that knowingly support sanctioned financial flows can help target the networks propping up Iran’s elites.

Yet blocking investments limits only part of Iran’s overseas asset network. To prevent illicit transactions, the United States can target the methods of Iranian financing, which range from jurisdictions that Iran uses for shadow banking, including the United Arab Emirates, Hong Kong, and Singapore, to unregulated cryptocurrency and beyond.

Angela Howard is a research analyst at the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from the author and FDD, please subscribe HERE. Follow Angela on X @angela__howard. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.