Financial Crime World

US Warns of Evasive Shipping Practices by Iran-Related Companies

As the US re-imposes sanctions on Iran following the withdrawal from the Joint Comprehensive Plan of Action (JCPOA), financial institutions are being warned to be vigilant for deceptive shipping practices used by Iranian or Iran-related companies to evade sanctions.

Deceptive Shipping Practices

According to a recent advisory issued by the Treasury Department’s Office of Foreign Assets Control (OFAC), these companies may use:

  • Falsified documents
  • Reflagging of vessels
  • Involvement of third parties to mask their activities with Iran

This is not a new tactic, as OFAC has previously identified similar practices used by Iranian shipping companies in the past.

Iran’s Illicit Use of Precious Metals

The advisory also highlights the Iranian regime’s previous use of precious metals such as gold to evade US sanctions and facilitate the sale of Iranian oil and other goods abroad. In response, the United States enacted sanctions specifically targeting Iran’s trade in precious metals, including Section 1245 of the Iran Freedom and Counter-Proliferation Act of 2012.

Virtual Currency

The advisory also notes the growing use of virtual currency, including bitcoin-denominated transactions worth at least $3.8 million per year since 2013. While the use of virtual currency in Iran is relatively small, it provides a potential avenue for individuals and entities to evade sanctions.

Financial institutions should be aware that:

  • Individuals and businesses in Iran can still access virtual currency platforms through the Internet
  • These P2P exchangers may operate as unregistered foreign money services businesses (MSBs) in jurisdictions that prohibit such activities

Conclusion

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The US is taking steps to re-impose sanctions on Iran following the withdrawal from the JCPOA, and financial institutions must be vigilant for evasive practices used by Iranian or Iran-related companies to evade sanctions. This includes being aware of:

  • Deceptive shipping practices
  • The illicit use of precious metals
  • The growing use of virtual currency

Financial institutions should have appropriate systems in place to comply with all relevant sanctions requirements and anti-money laundering (AML) / counter-terrorism financing (CFT) obligations, including:

  • Screening against the SDN List
  • Compliance with other OFAC-administered sanctions programs
  • Import and/or export restrictions with respect to particular jurisdictions