The United States has removed counter-terrorism sanctions from three entities and two aircraft that had previously been designated for alleged links to Iran’s Islamic Revolutionary Guard Corps (IRGC), according to an update published by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The move affects Iraq-based airline Fly Baghdad, logistics company Iraq Express, and two Boeing 737 aircraft that were sanctioned in January 2024 for allegedly supporting the IRGC-Quds Force. Media outlet reported that the removals appeared on the Treasury’s sanctions database on Aug. 5.

The decision marks a rare reversal of Iran-related counter-terrorism sanctions and has drawn attention because the original designations were tied to allegations that the airline network had assisted the IRGC-Quds Force in transporting personnel, weapons, and equipment across the Middle East.

Treasury cites significant behavioral changes

A Treasury official told media outlet that the sanctions were lifted after what the department described as “significant changes in behavior” by Fly Baghdad. The official did not provide details on what specific actions or compliance measures led to the delisting, citing the Treasury’s standard practice of limiting public discussion of sanctions reviews.

The official also emphasized that the action does not represent a broader change in U.S. policy toward Iran or the IRGC, which remains designated by Washington as a foreign terrorist organization and continues to face extensive U.S. sanctions. The Treasury stressed that sanctions could be reimposed if future conduct warrants renewed action.

What was removed from the sanctions list?

The entities removed from the Specially Designated Nationals (SDN) list include:

• Fly Baghdad
• Iraq Express
• Two Boeing 737 aircraft associated with the network

The original 2024 sanctions had frozen any U.S.-linked assets held by the entities and generally prohibited U.S. persons from engaging in transactions with them. Their removal means those restrictions are no longer in effect unless other sanctions authorities apply.

Move comes amid intensified Iran sanctions campaign

The delisting comes at a time when the United States has been expanding sanctions pressure on Iranian military and commercial networks. In late July, OFAC announced new sanctions targeting companies and individuals accused of supporting Mahan Air, which Washington has long described as a key conduit for IRGC operations. The Treasury said those measures were aimed at disrupting the movement of weapons, operatives, and military equipment linked to the IRGC.

Treasury records show that OFAC has continued to issue Iran-related designations and counter-terrorism sanctions throughout 2026, underscoring that the broader sanctions architecture against Iran remains firmly in place despite the latest removals.

Analysts see narrow, case-specific decision

Sanctions experts said the move appears to be a case-specific compliance determination rather than a diplomatic concession. Recent analyses of U.S. Iran policy have noted that OFAC retains the authority to remove entities from the SDN list when it determines that the basis for designation no longer applies or when targeted parties demonstrate sufficient corrective action.

The decision is nonetheless significant because it involves entities that had been publicly linked to the IRGC-Quds Force, one of the most heavily sanctioned components of Iran’s security apparatus.

Regional and diplomatic implications

The removal may provide limited commercial relief for Fly Baghdad and its associated operations, potentially easing access to international aviation services, insurance, and financial transactions that had been severely constrained by the U.S. sanctions designation. However, the airline could still face restrictions from other jurisdictions, financial institutions, or private counterparties that maintain enhanced compliance measures for Iran-related risks.

The Treasury’s clarification that the action is unrelated to ongoing regional negotiations involving Iran is likely intended to avoid speculation that Washington is offering sanctions relief in exchange for concessions tied to recent Middle East security tensions.

Background: Fly Baghdad’s 2024 designation

When Fly Baghdad was sanctioned in January 2024, the United States accused the airline of assisting the IRGC-Quds Force and affiliated militias by facilitating transportation and logistical support across the region. The designation formed part of a wider effort to target commercial entities allegedly used by the IRGC to evade sanctions and sustain its regional operations.

Since then, Washington has repeatedly argued that the IRGC relies on front companies, transportation networks, and commercial intermediaries to move funds and matériel despite international sanctions pressure.

Outlook

While the delisting of Fly Baghdad, Iraq Express, and the two Boeing aircraft represents a notable development in the administration of U.S. sanctions policy, officials have made clear that it does not signal a relaxation of Washington’s broader campaign against the IRGC and its affiliated networks.

For now, the action appears to reflect OFAC’s review process for designated entities rather than a shift in U.S. strategy toward Iran, leaving the wider sanctions regime against the IRGC, Iranian military procurement networks, and Tehran’s regional operations fully intact.