Washington continues blitz on third-country entities linked to sanctions evasion

The US is continuing its blitz of sanctions on third-country entities that Washington believes are helping sanctioned entities to continue doing business in global markets.

The latest sanctioning of 39 entities in Hong Kong, Singapore, Turkey and the UAE relate to them allegedly forming a “shadow banking” network for sanctioned Iranian entities such as Persian Gulf Petrochemical Industry (PGPI) and Triliance Petrochemical to access the international financial system and obfuscate their trade with foreign customers.

The move by the US treasury’s Office of Foreign Assets Control (OFAC) follows its designation earlier this year of other third-country actors linked to sanctions evasion (Trade-based Financial Crime, 8 March 2023).

Shadow banking

Key intermediary roles in transactions of the shadow banking network are played by UAE-based Bavi General Trading and Iran-based Kambiz Nabizadeh and Partners Exchange according to OFAC.

It says Nabizadeh Exchange serves as a vital trustee during the transfer of payments between PGPI front companies and the buyers of their petrochemicals while Bavi General has helped coordinate tens of millions of dollars’ worth of payments for front companies operated by PGPI and Triliance.

Chinese connection

Thirteen front companies operate out of Hong Kong, from where they receive the proceeds of petrochemical sales. Between 2021 and 2022, they transferred tens of millions of dollars related to petrochemical sales to China according to OFAC.

It says PGPI has used entities like Melikal for Medical & Medicine Trading to disguise its role in enabling Iranian petrochemical sales by using companies that appear to engage in medical goods trade while conducting non-medical transactions.

Dubai and Sharjah

UAE-based front companies, primarily in Dubai, also process a large volume of payments from overseas customers of PGPI says OFAC.

The US agency says that in early 2022, PGPI utilised Greenland Oil & Gas Trading to receive payment for petrochemical sales to Albahr Alaahmar Offshore Refined Oil Product Trading. Sharjah-based Famin, which operates out of Hamriyah Free Zone, has handled millions of dollars in payments from foreign buyers for petrochemicals shipped to Southeast Asia.

Foreign financial institutions

As a result of OFAC’s action, all property and interests in property of the sanctioned entities that are in the US or in the possession or control of US persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 per cent or more by one or more blocked persons are also blocked.

Unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the designated entities could be subject to US sanctions.

OFAC’s statement on the new sanctions, including a full list of entities sanctioned under this action, can be found here.


Categories: Trade Based Financial crimes News

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