WASHINGTON, Aug. 28 -- A bank does not need to be sanctioned to be finished. It only needs to lose the account that lets it touch dollars.

The Treasury said on Friday that its Financial Crimes Enforcement Network had proposed a rule revoking the correspondent banking access of Banque Misr's branch in the United Arab Emirates, cutting the Egyptian state lender's Dubai operation out of the American financial system. The stated reason is that its customers include what the Treasury described as apparent front companies used by Iran's Ministry of Defence and the Islamic Revolutionary Guard Corps to evade sanctions, and used for laundering on behalf of Iran's supreme leader, whom the release names as Mojtaba Khamenei.

The Treasury also put a...