The U.S. Treasury Department said Tuesday it is imposing economic sanctions on 50 people and firms across Hong Kong, the United Arab Emirates and the Marshall Islands that have been acting as a “sprawling shadow banking network” for Iran’s military.
Treasury’s Office of Foreign Assets Control said the entities and individuals are involved in the sale of Iranian oil and petrochemicals, which have helped Iran’s military and government gain illicit access to the international financial system.
The income pays for weapons and funding to proxy groups, including Yemen’s Houthis, as well as drone transfers to Russia, Treasury said.
Iran is accused of supplying Russia with drones that are used to bomb Ukrainian civilians as the Kremlin continues its invasion of Ukraine.
Included in the sanctions are Seyyed Mohammad Mosanna’i Najibi, an Iranian-Turkish money-changer, 27 cover companies controlled by Najibi based in Hong Kong, the United Arab Emirates and the Marshall Islands, and a Tehran-based currency exchange business, among others.
An inquiry through the Iranian branch of Najibi’s company, known as Sadaf Exchange, was not immediately answered.
Among other things, the sanctions deny the people and firms access to any property or financial assets held in the U.S. and prevent U.S. companies and citizens from doing business with them.
Treasury Deputy Secretary Wally Adeyemo said the U.S. “will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities. We continue to work with allies and partners, as well as the global financial industry, to increase vigilance against the movement of funds supporting terrorism.”
The U.S. has already sanctioned Iranian shadow banking businesses. I n March 2023, the U.S. imposed economic sanctions on 39 firms linked to a shadow banking system that helped to obfuscate financial activity between sanctioned Iranian firms and their foreign buyers, namely for petrochemicals produced in Iran.
Treasury Targets Shadow Banking Network Moving Billions for Iran’s Military
June 25, 2024
WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning nearly 50 entities and individuals that constitute multiple branches of a sprawling “shadow banking” network used by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and Islamic Revolutionary Guard Corps (IRGC) to gain illicit access to the international financial system and process the equivalent of billions of dollars since 2020. MODAFL and the IRGC engage in several commercial revenue-generating activities, most notably the sale of Iranian oil and petrochemicals.
Networks of Iranian exchange houses and dozens of foreign cover companies under their control enable MODAFL and the IRGC to disguise the revenue they generate abroad that is then available to use for a range of MODAFL and IRGC activities, including the procurement and development of advanced weapons systems such as unmanned aerial vehicles. This revenue also supports the provision of weapons and funding to Iran’s regional proxy groups, including Yemen’s Houthis, who continue a campaign of reckless attacks on global shipping, as well as the transfer of UAVs to Russia for use in its war of aggression against Ukraine.
“The United States is taking action against a vast shadow banking system used by Iran’s military to launder billions of dollars of oil proceeds and other illicit revenue,” said Deputy Secretary of the Treasury Wally Adeyemo. “We have sanctioned hundreds of targets involved in Iran’s illicit oil and petrochemical-related activity since President Biden took office, and we will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities. We continue to work with allies and partners, as well as the global financial industry, to increase vigilance against the movement of funds supporting terrorism.”
MODAFL is responsible for development, production, funding, and logistics for all of Iran’s defense industries. Iran’s budget allots billions of dollars’ worth of Iranian oil to the Iranian armed forces to sell abroad in order to supplement their budgets. MODAFL subsidiaries manufacture advanced conventional weapons, including ballistic missiles and unmanned aerial vehicles, which are used by Iran’s military, including the IRGC, or exported to other countries such as Russia, or partner groups such as the Houthis.
Today’s action is being taken pursuant to the counterterrorism authority in Executive Order (E.O.) 13224, as amended. OFAC designated MODAFL pursuant to E.O. 13224 on March 26, 2019 for assisting, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). The IRGC-QF was designated pursuant to E.O. 13224 on October 25, 2007 for providing support to multiple terrorist groups.
Previously, in March 2023, OFAC took action against several dozen entities that operated as part of an Iranian shadow banking network that moved billions of dollars’ worth of petrochemical sales proceeds for the Iranian regime, and the Financial Crime Enforcement Network (FinCEN) issued an advisory in May 2024 outlining the IRGC’s methods for raising and moving funds to support its terrorist partners and proxies, including Hamas, Hizballah, and the Houthis.
IRANIAN SHADOW BANKING
Shadow banking networks are multi-jurisdictional illicit finance systems which grant sanctioned Iranian entities access to the international financial system and obfuscate their trade with foreign customers. As depicted in the chart below, the MODAFL Supply Division uses exchange houses in Iran that manage numerous cover companies registered in permissive jurisdictions such as Hong Kong or the United Arab Emirates (UAE) to launder the revenue generated through foreign commercial activity, including oil sales conducted by U.S.-designated MODAFL affiliate Sahara Thunder, into clean foreign currency. The same cover companies, when directed by MODAFL and the exchange house managers, use the laundered foreign currency to procure weapons components and other materiel on the international market.
SEYYED MOHAMMAD MOSANNA’I NAJIBI AND SADAF EXCHANGE
Seyyed Mohammad Mosanna’i Najibi (Najibi) is an Iranian-Turkish money-changer who, since at least 2019, has managed several currency exchange businesses in Iran and Türkiye in coordination with the MODAFL Supply Division for the purpose of bypassing U.S. and European sanctions on Iran. Najibi carries out most of his business for the MODAFL Supply Division through the Iranian branch of his business, Seyyed Mohammad Mosanna’i Najibi & Co. Company, commonly known as Sadaf Exchange. Najibi works with the MODAFL Supply Division to establish cover companies and accounts for MODAFL, hold MODAFL’s money in accounts outside of Iran, transport hard currency across borders, retrieve revenue from sale of Iranian oil, and transfer funds to suppliers of MODAFL, Iran’s Armed Forces General Staff (AFGS), and the IRGC. Since at least 2020, Najibi has worked directly with top MODAFL officials to execute transfers of U.S. dollars to bank accounts in the People’s Republic of China, the Marshall Islands, Türkiye, and the UAE on their behalf, including transfers related to MODAFL cargo shipments. Najibi has also provided direct financial assistance to the IRGC-Qods Force (IRGC-QF) through the sale of gold in Türkiye for U.S.-designated IRGC-QF official Behnam Shahriyari.
Since 2020, Sadaf Exchange enabled the MODAFL Supply Division to conduct euro-, Emirati dirham-, and dollar-denominated transfers worth hundreds of millions of dollars to other MODAFL cover companies and exchange houses, including to Sahara Thunder and U.S.-designated Ansar Exchange. Najibi also owns a Türkiye-based currency exchange company, Golden Stars Kiymetli Madenler Tekstil Sanayi Ticaret Limited Sirketi (Golden Stars), which provides exchange services in conjunction with Sadaf Exchange. Through Golden Stars, Najibi conducts cash and gold transfers between Türkiye and Iran for the MODAFL Supply Division. In 2023, Najibi facilitated cash transfers worth tens of millions of dollars for MODAFL through Golden Stars.
Seyyed Mohammad Mosanna’i Najibi, Seyyed Mohammad Mosanna’i Najibi & Co. Company, and Golden Stars Kiymetli Madenler Tekstil Sanayi Ticaret Limited Sirketi are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
OMID SEPAH EXCHANGE COMPANY & HEKMAT IRANIAN EXCHANGE HOUSE
Omid Sepah Exchange Company (Omid Sepah) and Hekmat Iranian Exchange & Foreign Currency Services Company (Hekmat Iranian) are Tehran-based currency exchange businesses controlled by U.S.-designated Bank Sepah that use foreign cover companies to engage in shadow banking transactions on behalf of the MODAFL Supply Division, in collaboration with Najibi and Sadaf Exchange. Since 2020, Omid Sepah and Hekmat Iranian coordinated the transfer of tens of millions of dollars on behalf of the MODAFL Supply Division using numerous shell companies outside of Iran.
Omid Sepah Exchange Company and Hekmat Iranian Exchange & Foreign Currency Services Company are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
COVER COMPANIES USED FOR MODAFL TRANSFERS
OFAC is also designating the following 27 cover companies based in Hong Kong, the United Arab Emirates (UAE), and the Marshall Islands that are controlled by Najibi and used to obfuscate the MODAFL Supply Division’s international financial activity:
Hong Kong:
Gainon Co., Limited
Meishur Limited
Relan Limited
Roslami Limited
Turpami Limited
Suesian Co. Limited
Burren Co., Limited
Saisaipen Co., Limited
Xaster Co., Limited
Delaite Trading Co. Limited
Jocwa Co. Limited
Tenglan Limited
Kuwan Co., Limited
Jiankang Food Limited
Sino Trade Limited
Fengxian International Trading and Services Co. Limited
Copezzi Industrial Co. Limited
Caregis Trading HK Limited
Lzmar Trading Limited
Cherry Star Co. Limited
United Arab Emirates:
Lyoned Trading L.L.C.
Atvantic Goods Wholesalers L.L.C.
Anvex Trading L.L.C.
Sahil Mahaba Trading L.L.C.
Nasir Sadiqat General Trading L.L.C.
Brighten Star FZE
Marshall Islands:
Hermex International Corporation
These companies have collectively moved hundreds of millions for dollars’ worth of revenue for MODAFL related to oil and petrochemical sales or foreign currency exchange operations. Between June 2022 and 2023, MODAFL used Atvantic Wholesalers L.L.C., Brighten Star FZE, and Gainon Co., Limited to make transfers worth nearly $10 million through Ansar Exchange. In September 2023, Meishur Limited transferred approximately $30 million to U.S.-designated Sepehr Energy Jahan Nama Pars Company, a key entity overseeing the foreign sale of oil on behalf of Iran’s AFGS.
Between May and October 2023, Meishur Limited, Turpami Limited, and Xaster Co., Limited transferred approximately $40 million collectively to Sahara Thunder on behalf of MODAFL. In October 2023, Caregis Trading HK Limited and Lzmar Trading Limited received $8 million and $15 million each from Sahara Thunder.
Kuwan Co., Limited has used the international financial system to make hundreds of transfers totaling over $30 million to numerous companies, including U.S.-designated unmanned aerial vehicle (UAV) parts suppliers Skyline Advanced Technologies SDN BHDand Nava Hobbies SDN BHD and transfers totaling approximately $500,000 to U.S.-designated Iranian military procurement front company FY International Trading Co., Limited. In January 2022, Cherry Star Co. Limited transferred approximately 15 million euro to the IRGC Oil Command on behalf of MODAFL.
The above entities are all being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
ASADOLLAH SEIFI NETWORK
Iranian money-changer Asadollah Seifi (Seifi) continued his involvement in sanctions evasion schemes following his March 26, 2019 designation pursuant to E.O. 13224 for providing material support to a vast currency exchange network overseen by Ansar Exchange, which supported the IRGC and MODAFL. Seifi conducts sanctions evasion activities in support of the MODAFL Supply Division in Emirati dirham (AED) through UAE-based shell companies. On instruction from the MODAFL Supply Division, Seifi establishes shell companies and accounts for MODAFL’s use, converts or transports foreign currency using couriers, retrieves revenue from oil and petrochemical sales through cover companies, and holds MODAFL Supply Division money in cover company accounts outside of Iran, often in the UAE. Seifi also transfers foreign currency to suppliers of the IRGC and MODAFL and directly to the IRGC-QF at the behest of the MODAFL Supply Division.
Today, OFAC is re-designating Asadollah Seifi pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
Five shell companies based in the UAE that are controlled by Seifi and used by him to obfuscate MODAFL’s financial activity are also being designated today:
Mufflin Trading L.L.C.
Colwich Trading L.L.C.
Long Worth Goods Wholesalers L.L.C.
Bethesda Industrial Solvents Trading
O N C U Trading L.L.C.
Between 2021 and 2022, Mufflin Trading L.L.C., Long Worth Goods Wholesalers L.L.C., and Bethesda Industrial Solvents Trading were used to transfer collectively nearly 100 million AED to the Iran-based, MODAFL-affiliated exchange houses Omid Sepah, Hekmat Iranian, Sadaf Exchange, and Ansar Exchange.
The above entities are all being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
RAMIN JALALIAN NETWORK
Ramin Jalalian (Jalalian) is an Iranian currency exchanger and businessman who has managed several currency exchange businesses in Iran and the UAE in coordination with the MODAFL Supply Division for the purpose of bypassing U.S. and European sanctions on Iran. At the instruction of the MODAFL Supply Division, Jalalian establishes cover companies and accounts for MODAFL, holds MODAFL’s money in accounts outside of Iran, converts or transports currency across borders, retrieves revenue from sales of Iranian oil, and transfers funds to suppliers of MODAFL and the IRGC. Jalalian has worked directly with MODAFL to launder tens of millions of AED and euros through bank accounts in the UAE and Switzerland by using sales of gold as a pretext for conducting many large cross-border transactions.
Two shell companies based in the UAE and one based in Hong Kong, controlled by Jalalian and used to obfuscate MODAFL’s financial activity, are also being designated today:
Piera Global Trading L.L.C.
Astoria Star Heavy Equipment Trading L.L.C.
Golden Bronze Limited
Between 2020 and 2023, Jalalian used his front companies to conduct transfers worth over $30 million in AED, euro, and dollars, including transfers linked to Iranian oil and petrochemical sales directed by MODAFL, frequently in collaboration with Omid Sepah, Hekmat Iranian, or Ansar Exchange.
Ramin Jalalian and the above entities are all being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
SIAVASH NOURIAN NETWORK
Siavash Nourian (Siavash) is the owner of Iranian exchange house Siavash Nourian & Co. Exchange (Nourian Exchange), which is used by the MODAFL Supply Division for a wide range for foreign currency activities, including establishing cover companies and accounts, holding MODAFL’s money in cover accounts outside of Iran, converting foreign currency, transporting foreign currency using couriers, retrieving revenue from MODAFL’s oil and petrochemical sales, and transferring currency to suppliers of MODAFL and the IRGC.
Three shell companies based in Hong Kong and controlled by Nourian Exchange for the purpose of conducting foreign currency transfers on behalf of MODAFL are also being designated today:
Kumu Limited
City Base Group Limited
Net Trading Co. Limited
Between August and November 2023, Nourian Exchange facilitated numerous transfers worth tens of millions of dollars on behalf of the MODAFL Supply Division and the IRGC Oil Command using multiple currencies, including Chinese yuan, U.S. dollars, and AED. In October 2023, City Base Group Limited and Net Trading Co. Limited received approximately $30 million from Sahara Thunder for the MODAFL Supply Division through Nourian Exchange.
Siavash Nourian, Siavash Nourian & Co. Exchange, and the above entities are all being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
SEYYED REZA MIR MOHAMMAD ALI & ATROPARS COMPANY
Seyyed Reza Mir Mohammad Ali (Mir Mohammad Ali) is a key confidant of the MODAFL Supply Division and the CEO and owner of Iran-based Atropars Company, also known as Atropars Exchange, another exchange house that the MODAFL Supply Division uses to conduct financial activity outside of Iran. Mir Mohammad Ali establishes cover companies and financial accounts for the MODAFL Supply Division’s use, holds MODAFL funds in cover accounts outside of Iran, conducts foreign currency exchange, transports foreign currency to and from Iran using cover companies and couriers, and transfers foreign currency to suppliers of the IRGC and MODAFL. Mir Mohammad Ali’s annual activity for the MODAFL Supply Division, conducted through Atropars Exchange, amounts to tens of millions of dollars. Mir Mohammad Ali and Atropars Exchange control a number of cover companies that are used to support the MODAFL Supply Division. In 2022, Hong Kong-based companies controlled by Mir Mohammad Ali transferred over 15 million euros in oil and petrochemical sales revenue for the MODAFL Supply Division. Between March 2022 and March 2023, Atropars Exchange processed the equivalent of over $40 million in euros in incoming and outcoming transfers.
Seyyed Reza Mir Mohammad Ali and Atropars Company are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
SANCTIONS IMPLICATIONS
As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.
In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person.
The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.
Source » finance.yahoo