Iran’s Sanctions Evasion Tactics Raise Concerns for Financial Institutions

As the United States re-imposes sanctions on Iran following the collapse of the Joint Comprehensive Plan of Action (JCPOA), financial institutions are being warned to be vigilant against deceptive shipping practices and other tactics used by Iranian companies to evade U.S. sanctions.

Deceptive Shipping Practices and Sanctions Evasion

According to a new advisory from the Treasury Department’s Office of Foreign Assets Control (OFAC), Iranian companies have historically used:

• Falsified documents
• Reflagging of vessels
• Involvement of third parties to mask their activities and avoid detection

These tactics may include:

• Using container prefixes registered to another carrier
• Omitting or listing invalid, incomplete, or false container prefixes in shipping container numbers
• Naming non-existent ocean vessels in shipping documents

Precious Metals and Virtual Currency Used to Evade Sanctions

The advisory also highlights Iran’s use of precious metals, such as gold, to evade U.S. sanctions and facilitate the sale of Iranian oil and other goods abroad.

Additionally, it notes that Iran has used virtual currency, including bitcoin-denominated transactions worth at least $3.8 million per year since 2013.

Financial Institutions Must Be Vigilant

The advisory emphasizes the importance of financial institutions being vigilant against these tactics and taking steps to prevent their involvement in sanctions evasion.

This includes:

• Reviewing blockchain ledgers for activity that may originate or terminate in Iran
• Being aware of the international virtual currency industry’s dynamic nature and the potential for new virtual currency businesses to incorporate or operate in Iran

Financial institutions and virtual currency providers with Bank Secrecy Act (BSA) and U.S. sanctions obligations must also be aware of and comply with all relevant sanctions requirements and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations.

Conclusion

The collapse of the JCPOA and the re-imposition of U.S. sanctions on Iran highlight the need for financial institutions to remain vigilant against deceptive shipping practices and other tactics used by Iranian companies to evade U.S. sanctions.

By being aware of these tactics and taking steps to prevent their involvement in sanctions evasion, financial institutions can help prevent the misuse of the international financial system and protect against the risks posed by Iran’s sanctions evasion activities.

Source

U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), “FinCEN Advisory” [insert date].